Securities and Exchange Commission
Washington, D. C. 20549
_______________
Form 10-SB
______________
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
Worldwide Wireless Networks, Inc.
(Name of registrant in its charter)
Nevada 88-0286466
(State of incorporation) (I. R. S. Employer Identification No.)
770 The City Drive South, Suite 3700
Orange, California 92868
(714) 937-5500
(Address and telephone number of principal
executive offices and principle place of business)
________________
Securities registered pursuant to Section 12(b) of the Act:
None
________________
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001
Title of each class
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Table of Contents
PART I
Item 1: Description of Business 3
Item 2: Management's Discussion and Analysis or Plan of Operations 8
Item 3: Description of Property 12
Item 4: Security Ownership of Certain Beneficial Owners and Management 13
Item 5: Directors, Executive Officers, Promoters and Control Persons 14
Item 6: Executive Compensation 15
Item 7: Certain Relationships and Related Transactions 15
Item 8: Description of Securities 16
PART II
Item 1: Market Price for Common Equity and Dividends of Worldwide
Wireless and Other Shareholder Matters 16
Item 2: Legal Proceedings 17
Item 3: Changes In and Disagreements With Accountants 17
Item 4: Recent Sales of Unregistered Securities 17
Item 5: Indemnification of Directors and Officers 18
PART F/S
Index to Financial Statements 19
PART III
Item 1: Index to and Description of Exhibits 20
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FORWARD LOOKING STATEMENTS
In this registration statement references to "Worldwide Wireless," "we,"
"us," and "our" refer to Worldwide Wireless Networks, Inc.
This Form 10-SB contains certain forward-looking statements. For this
purpose any statements contained in this Form 10-SB that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Worldwide Wireless' control. These factors include but are not limited to
economic conditions generally and in the industries in which Worldwide
Wireless may participate; competition within Worldwide Wireless' chosen
industry, including competition from much larger competitors; technological
advances and failure by Worldwide Wireless to successfully develop business
relationships.
PART 1
ITEM 1: DESCRIPTION OF BUSINESS
Business Development
Worldwide Wireless Networks, Inc. was incorporated in the state of Nevada
on June 10, 1992 as Second Investors Group, Inc. On June 19, 1998 Second
Investors effected a name change to Progressive Environmental Recovery
Corporation. On March 5, 1999 Progressive Environmental changed its name to
Worldwide Wireless Networks, Inc. We were organized for the purpose of
providing investment opportunities in emerging companies but remained inactive
until our reverse merger with Pacific Link Internet, Inc. ("Pacific Link") in
April of 1999. (See, "Part I, Item 2: Management's Discussion and Analysis -
Reverse Merger Treatment.")
As a result of the reverse merger we acquired the business assets of
Pacific Link, a California corporation, doing business as Global Pacific
Internet. Pacific Link operated wireless network systems for customers in the
Orange County, California area. Pursuant to the merger agreement, the
directors and officers of Worldwide Wireless resigned and the management of
Pacific Link filled the vacancies, and the former shareholders of Pacific Link
obtained 62.5% of the total voting power at that time.
Due to a conflict with corporate names in California, Worldwide Wireless
has assumed the name of Worldwide Wireless Communications, Inc. in the state
of California and is doing business as Global Pacific Internet in California.
Our short operating history and operating losses raise substantial doubt
about our ability to continue as a going concern. This fact is reported by
our independent auditor Crouch, Bierwolf & Chisholm.
Business
Worldwide Wireless is doing business as "Global Pacific Internet" within
the Orange County area. We are a networking solutions company which
specializes in high speed Internet access using our own wireless network.
Other products we provide include direct service link, frame relay, web
hosting and network consulting. We serve all sizes of commercial business and
the home office market.
We began large scale commercial operations in April 1999 and have
accomplished the following:
Service to approximately 165 commercial customers with high-speed data
network services.
Expansion of a high-speed wireless network which currently serves
approximately 80% of the Orange County, California area.
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Delivery of DSL (Digital Subscriber Line) and 100 Mbps wireless service
to our customers.
Opening of a co-location facility to offer central office services to
customers.
Hiring of a direct sales force with support and management teams.
Wireless Network
- ----------------
We have the technical expertise to build and operate large scale wireless
networks without relying on an existing wire-based network, such as a
telephone networks copper lines. Our wireless network allows the user to
connect to an Internet service provider bandwidth via a radio modem.
Typically a customer relies on an incumbent local exchange carrier such as a
telephone company's copper wires or a cable company's television coaxial plant
to provide the physical means for the customer to connect to the Internet.
Our primary network implementation is a wireless network consisting of a
network operations center, centralized base stations known as "points-of
presence ("POP"s)," and distribution radios which connect to the end customer.
We currently operate a wireless network which has been operational for
approximately twelve (12) months and covers an estimated 80% of the Orange
County area. We rely on fourteen POPs, which are generally located on the top
of tall buildings. We negotiate a long term site license for each POP
location.
The typical POP site consists of one indoor/outdoor equipment cabinet
(62" h X 23" w X 34"d) and an array of four (4) to eight (8) small sectional
antennas (42" h X 4" w). The sectional antennas can be painted any color to
match existing surroundings. There is no roof penetration and once the system
is installed there are minimum inspections. We pay for all costs associated
with the installation and our unit requires a single phase 110 volt outlet for
power.
As part of our network expansion and in the course of normal operations,
we are negotiating to expand our rights associated with the current POP
locations as well as acquire additional point-of-presence locations.
Management currently believes that the market for these facilities is
reasonable for its purposes; however, the ability to acquire and maintain
these rights at reasonable pricing will be a material factor in the success of
the company.
In general, our end customers must be within five miles of a POP and have
line-of-sight visibility between the POP and an antenna located at their
building. Each end customer must install a rooftop or window radio with an
antenna. When the customer accesses the Internet the signal travels over
their building's wiring or wireless network to the rooftop or window antenna.
The antenna sends the data signal to a nearby POP, where the signal is
communicated to our broadband switching center and then onto its final
destination.
Our wireless network provides flexibility, quick installation and quality
service for Internet users. For example, during the Panasonic Shock Wave
Beach Games in August of 1999 we established a temporary wireless system which
provided Internet access to the participants on the beach. We usually can
install the necessary equipment at a customers business within two to five
days. Actual installation of a wireless system may take as little as four
hours. Installation and incorporation into our wireless network can be
accomplished as fast as within 48 hours following a signed service order. This
can be accomplished when we rely on installation scheduling and preparation
prior to contract signing. However, we generally plan for a three week time
period for completion of installation. We provide a quality service because
we manage our network traffic by using routing equipment that measures and
controls packet flows, and we install equipment with performance levels that
meet or exceed those required by the customer.
Our wireless network is engineered to provide high reliability and wide
area coverage. We generally operate at a greater than 98% uptime. Our
wireless networks are capable of 128 kbps through 100 Mbps speeds. We operate
on a combination of licensed frequencies of 23 GHz and unlicenced frequencies
in the 2.4 GHz ISM band, 5.8 GHz ISM band, and 5.2 GHz UNII band ranges.
Licensure is determined on a site-by-site basis
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depending on the distance and type of network link. Reliability is achieved
through redundant radio links and wired line back-up. Security is provided
through spread spectrum radio links and encryption, among other standard
security measures. Our radio modem transmits data by a microwave frequency
which changes 32 times a second. During our twelve months of operations we
have not experienced any significant weather interference, however we are not
sure how a wireless network in geographical areas with more severe weather
than southern California would be affected.
Principal Services
High-speed Internet: We offer connections to the Internet at speeds from
128 kbps to 100 Mbps. This service provides always-connected, secure access
for all sizes of commercial businesses. These connections are primarily
supported by our wireless network with the balance of customers being served
by DSL and leased T-1 circuits. We enhance our service by balancing and
distributing our traffic across our upstream connections, which include
Digital Broadcast Networks, Savis, and Exodus networks. As of September 23,
1999 we have approximately 165 high-speed wireless customers.
Dial-up Internet Access: As of September 23, 1999 we provide Internet
access to 1,772 Internet users using dial-up connections. This service is
marketed to the general public throughout Orange County and to our commercial
customers to support work-at-home, remote server access, and other business
applications.
Data Center Services: We offer web hosting, web sites and co-location
services to our customers. As of September 23, 1999 we provided such services
to 164 customers.
Network Consulting: We have substantial expertise in building and
operating large-scale wireless, ATM, and Internet Protocol networks. We offer
design and implementation services for private wireless networks and
consulting services to develop network hardware components. As of September
23, 1999 we have generated approximately $50,000 in revenues from these
services.
Sales and Marketing
Our historical sales have resulted from domestic operations primarily
located in Orange County. This area has technology-oriented businesses that
represent our prime targeted customers. By focusing our initial expansion to
markets in southern California, management believes that we can efficiently
leverage our network assets, brand equity, central facilities, administration,
and technical resources which currently exist.
We generally work with the end customer when providing network access.
We believe that a direct customer relationship provides the opportunity for us
to cross-sell network products, improve customer satisfaction, and reduces the
chance of customer attrition. In May 1999, we created a direct sales force of
eight sales agents. This sales force will market to businesses of all sizes
within our network service area. The sales force is supported by our customer
service, technical experts, and outbound telemarketing activities.
At the local level, we advertise in general print media and through
publications targeted at the information professional. This direct sales
activity is supplemented by telemarketing sales agents and through customer
referrals.
Our backlog results from the difference in timing between a firm customer
order and installation of service. In general, the target interval for
installation is three weeks. As of September 23, 1999, we estimate the
monthly recurring revenue of contracts pending but not installed to be
approximately $30,000.
Competition
Our market is crowded with companies which provide Internet networks and
Internet access to businesses and individuals. We face competition from
existing network and Internet service providers most of whom have financial
resources, brand recognition, work coverage, technical resources, and sales
forces much larger than ours.
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These providers may have substantial financial and technical resources
directed at markets served by us. As a result we may need to adjust pricing
of our products, expend more funds to acquire customers and may experience
higher customer attrition. In addition, we can not assure that we can
successfully compete with the larger and more established companies that
already provide Internet service.
In the wireless market we compete with Teligent, Inc., Winstar
Communications, Inc., and NEXTLINK Communications, Inc. who offer wireless
directional, high-speed network services. Pacific Bell, AT&T, World Com,
Qwest, Cox Communications, Sprint and similarly situated telecommunications
companies offer Internet products as stand-alone products or in a bundle with
telecommunications, network services, or wide-area networking. Covad and
Rythms Net Connections are representative of service providers who provide
high-speed network facilities primarily by using state-of-the-art modems in
conjunction with the facilities of incumbent local exchange carriers.
Time Warner, @Work, and similar cable companies have converted cable
television coaxial lines to support bidirectional, high-speed network
services. We also compete with Internet dedicated access companies such as:
Verlo, Concentric, and Level 3. These companies specialize in Internet
protocol products which include data center services, web hosting, virtual
private networking, network consulting, and related products.
We compete with these companies by offering a unique service, rapid
installation, technical performance, quality of customer service and price.
We develop our networks primarily with our own internal engineering expertise.
We believe the use of our own personnel increases the uniqueness of our
service and prevents the direct copy by competition. Our own technical
network configuration, radio technology, and POP site implementations reduce
cost and improve performance. We have the capacity to deliver Internet
service in 48 hours. Most competing technologies require 30 to 45 days to
install similar products.
Although pricing is an important factor in the customer's purchase
decisions, we believe that customer relationships, customer service and
consistent quality will be the key to generating customer loyalty. During the
past several years management has observed market prices for network services
declining, which is a trend management believes will likely continue. As
prices decline for any given speed of service, we expect that our total number
of customers will increase due to more individuals and companies deciding to
use such services. As the total number of customers increase, the proportion
of customers purchasing our higher-speed, higher-priced services will increase
because the cost to upgrade a customer's speed is generally minimal.
Many of our competitors rely on existing networks of copper lines owned
by third parties. We believe these networks are facing increased demand from
individuals and businesses for new services at a reasonable cost. Our
management believes that elimination of reliance on third parties reduces our
costs by eliminating the expense of payments to such third parties for labor
costs associated with installation and costs of troubleshooting network
problems. Further, we believe that capital expenditures associated with
constructing our wireless network are substantially lower because we do not
have to physically construct a wire network.
Principal Suppliers
Our principle suppliers provide hardware and software that is
incorporated into our networks. While no single vendor represents a majority
of capital spending, network performance depends on the operation and support
of these products. We rely on third-party vendors for equipment, upstream
bandwidth, operational software, and product support. We currently rely on
six vendors for our equipment and four vendors for upstream bandwidth access.
Our product availability and network performance may be diminished when and if
these providers limit availability of service, delay product, or deviate from
our expectations for performance. However, management believes these vendors
can be replaced within 60 days. Our agreements with these suppliers typically
require specific performance on our part for financial, service, or
operational actions, and any failure in our performance could result in
penalties or increased cost of operation. As is customary for the industry,
damages owed by a company for failure to provide bandwidth are generally
limited to service credits for the circuits affected.
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Trademark, License and Intellectual Property
Our primary service mark in our service area of Orange County is Global
Pacific Internet. We are currently seeking trademark protection for "Global
Pacific Internet" and "Worldwide Wireless Networks, Inc.". The success of our
business depends in part on brand recognition, trade secrets, network
hardware, and software which may be proprietary or purchased from third-
parties. We rely upon a combination of licenses, confidentiality agreements
and other contractual covenants to establish and protect our technology and
other intellectual property rights. Although we do not believe that our
intellectual property infringes on the rights of any party, third-parties may
assert claims for infringement which may be successful or require substantial
resources to defend.
We currently hold two FCC private operational fixed microwave radio
station licenses (See, "Government Regulations," below). Both licenses will
expire in July of 2009.
Product Development
We conduct research and development as an incidental activity to our
ordinary operations. Therefore, we have not spent any material amount for
research and development during the past two fiscal years. We expect to
devote substantial resources to increase market penetration within our current
service area as well as expand our wireless network to other areas in southern
California.
In May of 1999 we entered into a joint venture with Bridge Technology,
Inc. Pursuant to the agreement we will provide our know how to and $50,000
for capitalization of Pacific Bridge Net, a subsidiary of Bridge Technology.
Pacific Bridge Net will develop a wireless Internet access system for the
Asian market. We will have a 20% interest in the venture and will have the
right to sell the radio equipment which is developed during the venture in the
United States. We cannot assure that this joint venture will come to fruition
or that we will be successful in the Asian market.
Government Regulation
At the federal level, the FCC has jurisdiction over the use of the
electromagnetic spectrum (i.e., wireless services) and has exclusive
jurisdiction over all interstate telecommunications services, that is, those
that originate in one state and terminate in another state. State regulatory
commissions generally have jurisdiction over intrastate communications, that
is, those that originate and terminate in the same state. Municipalities and
other local jurisdictions may regulate limited aspects of our business by, for
example, imposing zoning and franchise requirements and requiring installation
permits. We are also subject to taxation at the federal and state levels and
may be subject to varying taxes and fees from local jurisdictions.
A large portion of our wireless networks operate in a radio spectrum not
requiring licensure under current regulations. As an Internet service
provider we are not currently directly regulated by the Federal Communications
Commission or state Public Utilities Commission. However, as required by law,
we license frequency spectrum directly from the Federal Communications
Commission for a portion of the high-speed portions of our wireless network.
Changes in the law or the interpretation of existing law may cause increased
regulation of our business or restrictions on the unlicenced radio spectrum
currently used in the wireless networks.
Employees
We currently have approximately 36 full time employees with expertise in
sales, engineering, customer service, and finance. The majority of our
employees are based in Orange County, California. We believe we have good
relations with our employees and none are covered by any collective bargaining
agreement.
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Reports to Security Holders
Worldwide Wireless has voluntarily elected to file this Form 10-SB
registration statement in order to become a reporting company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Following
the effective date of this registration statement, we will be required to
comply with the reporting requirements of the Exchange Act. We will file
annual, quarterly and other reports with the Securities and Exchange
Commission ("SEC"). We also will be subject to the proxy solicitation
requirements of the Exchange Act and, accordingly, will furnish an annual
report with audited financial statements to our stockholders.
We currently use an investor relations firm, Columbia Financial Group,
and interested persons may call at (888) 301-6271. On our behalf, Columbia
Financial Group has obtained membership to Internet Stock Market Resources,
Inc. Internet Stock Market Resources, Inc. is an information exchange which
provides up-to-date information on publicly traded companies to its members.
Interested persons may also visit our web site at www.wwwn.com.
Available Information
Copies of this registration statement may be inspected, without charge,
at the SEC's Public Reference Room at 450 Fifth Street N.W., Washington, D.C.
20549 and at the Pacific Regional offices of the SEC located at 5670 Wilshire
Boulevard 11th Floor, Los Angeles, California 90036-3648. The public may
obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0300. Copies of this material also should be available
through the Internet by using the SEC's EDGAR Archive, which is located at
http://www.sec.gov.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
Overview
We are a networking solutions company which provides high speed Internet
access using our own wireless network, dial-up Internet access, data center
services and network consulting. Since April of 1999 we have had large scale
commercial operations and have developed a commercial customer base, a direct
sales force and have expanded our wireless network. Our primary market is
currently Orange County, California, where we operate our wireless network.
While we have experienced revenue growth since our inception, we have operated
at a net loss. Management believes that our continued expansion will result
in additional losses for the foreseeable future.
Revenues. We generate revenues primarily through annuity-like service
contracts with customers, sale and installation of wireless networks, and
network consulting. We recognize revenues when services are completed. We
believe that growth in revenue will come from additional penetration in
markets currently served by existing networks, expansion of complimentary
product lines to existing and new customers, and geographic expansion using
currently deployed technologies. We have spent, and will continue to spend,
significant resources on these activities.
Cost of Revenues. Cost of revenues consist of third-party network usage
costs, depreciation of network equipment, technical staff costs, and occupancy
costs. Third-party network costs are expensed in the period when services are
rendered and are generally proportional to the number of customers.
Investment in network equipment is related primarily to geographic network
expansion and incremental customer installations, which results in increased
depreciation expense in future periods.
We do not currently anticipate that inflation will have a material impact
on our results of operations.
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Sales and Marketing. Sales and marketing expenses include salaries,
sales commissions, employee benefits, travel and related expenses for our
direct sales force, fees paid to third-party sales agents, marketing and sales
support functions. In an effort to increase our revenues, user base and brand
awareness, we expect to increase significantly the amount of spending on sales
and marketing over the next year. Marketing costs associated with increasing
our user base, which to date have been minimal, are expensed in the period
incurred.
General and Administrative. General and administrative expenses include
salaries, employee benefits and expenses for our executive, finance, legal,
and human resources personnel. In addition, general and administrative
expenses include fees for professional services and occupancy costs. We
expect general and administrative expenses to increase in absolute dollars as
we continue to expand our administrative infrastructure to support the
anticipated growth of our business, including costs associated with being a
public company.
Reverse Merger Treatment
In April of 1999 Worldwide Wireless completed a merger with Pacific Link
Internet, Inc., a California corporation doing business as Global Pacific
Internet. Pacific Link was incorporated in September of 1997 and its
operations began in August of 1997. As a result of the merger Worldwide
Wireless acquired the business operations, services and assets of Pacific Link
which are a significant part of our ongoing business and the services that we
sell. In conformance with generally accepted accounting principles, the
merger has been accounted for as a "reverse merger" and the accounting
survivor is Pacific Link.
The reverse merger was completed pursuant to the statutory requirements
of California and Nevada through the exchange of 7,000,000 shares of the
Worldwide Wireless' common stock for 100% of the outstanding stock of Pacific
Link. The merger was structured as a tax free statutory merger pursuant to
Section 368 (a)(1)(A) of the Internal Revenue Code of 1986, as amended.
Worldwide Wireless raised $1,000,000 in anticipation of the merger and
provided this as the only asset of the newly combined organization. The
merger was treated as a reverse merger for accounting purposes, therefore the
August 31, 1999 period is consolidated and the December 31, 1998 and 1997
period is that of Pacific Link, only.
Recent Developments
On October 27, 1999, we entered into a contract to purchase wireless
telecommunications equipment from Adaptive Broadband Corporation. Pursuant to
the agreement we have committed to purchase 2,624 units, 5,120 units and 7,760
units during the first, second and third years of the agreement, respectively.
Units consist of subscriber units or access points. The agreement may be
terminated by written notice from either party for occurrence of several
specific events, notably, if either party is not satisfied with the
performance of the other party. Obligations of the agreement will survive
early termination to the extent purchase orders are accepted by Adaptive
Broadband Corporation and minimum additional payments are required.
We anticipate that approximately 20% of the equipment purchased as a
result of the agreement will be used in our own wireless operations and the
remaining 80% will be resold to third parties. We expect to purchase a
minimum of $4.4 million, $6.4 million and $7.76 million in such equipment for
the first, second and third year of the agreement. As of this filing we
anticipate that this agreement will provide additional revenues from wireless
equipment sales, however, we cannot assure what effect the commitments
required under the agreement will have on our results of operations.
Liquidity and Capital Resources
Since Pacific Link's inception, it has financed its operations primarily
through the private placement of equity securities, loans, leasing
arrangements, cash-flow from operations and the merger completed with
Worldwide Wireless in April 1999. As of August 31, 1999 cash reserves totaled
$183,385 with total current assets of $451,708. We have posted operating
losses since inception. Our long term debt was $577,345 as of August 31,
1999. As of December 31, 1998, Pacific Link's principal commitments consisted
of office, roof-rights payments, and equipment leases. Future minimum cash
payments on notes payable are approximately $40,577 through the year 2010.
Future minimum lease payments are $89,350 through the year 2001. Future
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minimum operating lease payments are $603,844 through the year 2003.
The consolidated cash flows show net cash used for our operating
activities was $396,101 for the eight months ended August 31, 1999. Net cash
used for operating activities consisted primarily of net operating losses and
network asset purchases. Net cash provided by our financing activities was
$1,341,260 for the eight months ended August 31, 1999. Net cash provided by
financing activities was principally attributable to the sale of securities by
Worldwide Wireless prior to the merger in April 1999.
We expect to continue to incur significant capital expenditures in the
future, including additions and enhancements to our server and network
infrastructure, software licenses and furniture, fixtures and equipment. The
actual amount of capital expenditures will depend on the rate of growth in our
user base and available resources, which is difficult to predict and which
could change dramatically over time. Technological advances may also require
us to make capital expenditures to develop or acquire new equipment or
technology. We intend to use a combination of our cash, debt, and future
securities offerings to fund our capital expenditures in a manner which
minimizes our cost of capital.
If additional funds are needed, we can not assure that funds will be
available from any source, or, if available, that we will be able to obtain
the funds on terms agreeable to us. We have not investigated the
availability, source or terms for external financing. Also, the acquisition
of funding through the issuance of debt could result in a substantial portion
of our cash flows from operations being dedicated to the payment of principal
and interest on the indebtedness, and could render us more vulnerable to
competitive and economic downturns.
Any future securities offerings will be effected in compliance with
applicable exemptions under federal and state laws. The purchasers and manner
of issuance will be determined according to our financial needs and the
available exemptions. At this time we have not decided to offer securities
and, accordingly, have not determined the type of offering or the type or
number of securities which we will offer. We have no plans to make a public
offering of our common stock at this time. We also note that if we issue more
shares of our common stock our shareholders may experience dilution in the
value per share of their common stock.
Results of Operations
The following table sets forth selected consolidated statements of
operating data as a percentage of total revenues:
Year ended Year ended 8 months ended
Dec 31 Dec 31 August 31
1997 1998 1999
AS A PERCENTAGE OF REVENUES
Revenues................... 100% 100% 100%
Cost of revenues........... 69.6% 51.1% 42.5%
Gross profit............... 30.3% 48.9% 57.5%
Operating expenses:
Selling ................. 25.3% 18.8% __
General and administrative 51.1% 54.0% __
Total operating expenses . 76.4% 72.9% 115.9%
Loss from operations ....... 46.0% 24.0% __
Other income (expense), net. 10.4% 15.0% __
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Net loss ................... 56.5% 39.2% 58.5%
Revenues. Revenues for the year ended December 31, 1998 were $841,841,
which represented an increase of $570,000, or 209.6%, from $271,841 for the
year ended December 31, 1997. As of August 31, 1999 we have posted $1,058,135
in revenues. The increase was primarily attributable to revenues generated
from incremental sales to new customers of high-speed wireless network
services. In particular, we generated approximately $580,102, or 54.8% of our
total revenues for the interim period ended August 31, 1999 from wireless
customers. We also generated approximately $172,629, or 16.3% of our total
revenues for such interim period from dial-up customers. The balance of
$305,404, or 28.9% resulted from other services.
Cost of Sales. Cost of revenues for the year ended December 31, 1998 was
$430,600, which represented an increase of $241,218, or 127.3%, from $189,382
for the year ended December 31, 1997. The cost of sales for the period ended
August 31, 1999 was $449,820. The increase was primarily attributable to
increased third-party network service expense related to the growth in our
user base and depreciation related to our network costs.
Selling Expenses. Selling expenses for the year ended December 31, 1998
were $158,592, which represented an increase of $89,765, or 130.4%, from
$68,827 for the year ended December 31, 1997. At June 30, 1999 our selling
expenses were $174,428. The increase was primarily due to the hiring of
additional direct sales force personnel and success-based sales commissions.
General and Administrative. General and administrative expenses for the
year ended December 31, 1998 were $455,126, which represented an increase of
$316,157, or 227.5%, from $138,939 for the year ended December 31, 1997. We
posted $657,915 for such expenses as of June 30, 1999. The increase was
primarily due to the hiring of additional administrative personnel and
increased professional and consulting expense. We also will experience
increases in our general and administrative expenses due to preparation of the
annual and quarterly reports which will be required of us once we become a
fully reporting company.
Interest Expense. Interest expense consists primarily of interest
expense on capital equipment leases. Interest expense for the year ended
December 31, 1998 was $51,455, which represented an increase of $32,761 or
175.2%, from interest expense of $18,692 at the year ended December 31, 1997.
As of August 31, 1999 we have posted $22,028 for interest expense. The
increase was primarily attributable to interest on a capital lease and
additional long term debt.
Factors Affecting Future Operations
Our operating results may fluctuate substantially in the future as a
result of a variety of factors, many of which are outside of our control,
including those discussed elsewhere in this filing. We plan to significantly
increase our operating expenses and capital expenditures to expand our sales
and marketing efforts, promote the brand, continue to enhance the features and
functionality of our product line, upgrade our internal network
infrastructure, pursue new distribution channels and hire new personnel across
all levels of our organization. We determine our operating expenses largely
on the basis of anticipated growth in our revenues, however, some of our
expenses are fixed in the short term. There are risks associated with the
timing and achievement of revenue targets due to a variety of factors, and
there can be no assurance that revenues will increase commensurately with
expenses. We believe that our expenses will exceed our revenues for the
foreseeable future. As a result of these and other factors, our operating
results may vary substantially from quarter to quarter.
Seasonal Aspects
Our business is not seasonal because the sale of our services is not
linked to seasonal variables.
Year 2000 Compliance
Many existing computer systems and software are coded to accept only two
digit entries in the date code
11
<PAGE>
field and cannot distinguish 21st century dated from 20th century dates. If
not corrected, various problems may arise from the improper processing of
dates and date-sensitive calculations by computers and other machinery as the
Year 2000 is approached and reached. These problems include system failures
or miscalculations causing disruptions of operations including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar business activities. As a result, many companies' software and
computer systems may need to be upgraded or replaced to comply with these Year
2000" requirements.
State of Readiness. We have, and are currently, implementing the
following assessment and process in an effort to assess and remedy any Year
2000 issued which could impact our existing operations:
Phase I: Assessment of Operations (completed in July 1999);
Phase II: Prepare Formal Test Plan (completed in August 1999);
Phase III: Implement Test (completed in September 1999); and
Phase IV: Remediation of Year 2000 issues (In process - estimated
completion in October 1999).
We have completed our formal assessment of the impact that the Year 2000
problem may have on our existing operations and believe the following four
distinct areas of our existing operations may be affected by the Year 2000
problem:
DATA NETWORKS. Because the Year 2000 risk was a known factor during
the majority of our network construction, our design and third-party equipment
was compliant from inception. We believe that the network is currently
compliant and are testing to judge readiness.
MONITORING AND CONTROL SYSTEMS. We use third-party equipment and
software and as a result, our ability to address Year 2000 issues is to a
large extent dependent upon the Year 2000 readiness of these third-parties'
hardware and software products. These products include servers manufactured
by Compaq, Intel, Dell and similarly situated computer manufacturers, network
equipment manufactured by Cisco, database management, financial application
and other software.
We have reviewed documentation on Year 2000 compliance prepared by the
third-parties from whom we have purchased hardware and software products.
Based upon our review of such documentation and the fact that we either
purchased the most current product versions available from these third-parties
or installed the latest patches or upgrades available, we believe these
applications are Year 2000 compliant with the exception of three servers which
are scheduled for replacement. We estimate that the remaining expenditures to
upgrade these systems for compliance is $10,000.
THIRD-PARTY NETWORK PROVIDERS. We are dependent on our third-party
network services carriers to provide access between their networks and our
network. We have initiated discussions with all of our providers to determine
the extent to which we are vulnerable to these third-parties' Year 2000
issues. We have obtained Year 2000 readiness disclosure statements from these
carriers which confirm that their systems are Year 2000 compliant or that they
are in the process of becoming Year 2000 compliant. Wherever practical, we
use diverse pathways and providers to minimize the risk that a single third-
party failure will disrupt service to our customers.
NON-OPERATIONAL SYSTEMS. Our non-operational technology systems, such
as heating and air conditioning, security systems, accounting, and other
embedded technology, may also be subject to Year 2000 risks. We have reviewed
Year 2000 compliance statements from the manufacturers of our non-operating
systems. Based on our assessment to date, we believe that these systems are
Year 2000 compliant.
In addition, we plan to continue to assess and test any new systems that
we add to our operations for Year 2000 compliance.
12
<PAGE>
The Risks. If Year 2000 issues prevent our users from accessing the
Internet, our business and operations will suffer. Any failure on our systems
and our communications infrastructure with respect to the Year 2000 problem
could result in:
- increased user turnover and corresponding loss of revenues; or
- increased allocation of our resources to address Year 2000.
ITEM 3: DESCRIPTION OF PROPERTY
Our principal executive offices are located in Orange, California, where
we lease 5,307 square feet of office space with roof rights for antennas. We
renewed the lease on March 30, 1999 and it will expire in 2004. The monthly
rent varies from approximately $10,083 in the first year to $11,145 in the
fifth year. This office space is in good condition and satisfies our current
space needs.
We also lease two office spaces in Irvine, California. One office space
located at 5 Park Place is 1,062 square feet and houses our sales agents.
Such lease will expire in April of 2003 and requires a basic rent payment of
$2,549 per month which is subject to adjustments for the term of the lease.
The other office space located at 8001 Irvine Center Drive is subleased to a
computer consulting company for the costs of the lease which is approximately
$4,021 per month.
ITEM 4: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of August 31, 1999, the beneficial
ownership of our outstanding common stock of; (I) each person or group known
by us to own beneficially more than 5% of our outstanding common stock, (ii)
each of our executive officers, (iii) each of our director's and (iv) all
executive officers and directors as a group. Beneficial ownership is
determined in accordance with the rules of the SEC and generally includes
voting or investment power with respect to securities. Except as indicated by
footnote, the persons named in the table below have sole voting power and
investment power with respect to all shares of common stock shown as
beneficially owned by them. The percentage of beneficial ownership is based
on 11,599,988 shares of common stock outstanding as of August 31, 1999.
CERTAIN BENEFICIAL OWNERS
Common Stock Beneficially Owned
-------------------------------
Name and Address of Number of Shares of
Beneficial Owners Common Stock Percentage of Class
- ----------------- ------------ -------------------
Sean LeMons 774,000 6.7%
15123 Brookhurst #205
Westminster, California 92683
Ming-Chau Yeung 774,000* 6.7%
9 Red Coat Place
Irvine, California 92602
13
<PAGE>
MANAGEMENT
Common Stock Beneficially Owned
--------------------------------
Name and Address of Number of Shares of
Beneficial Owners Common Stock Percentage of Class
- ----------------- ------------ -------------------
Dennis and Susan Shen 3,080,000* 26.5%
770 The City Drive South
Suite 3700
Orange, California 92868
Jack Tortorice 2,906,000 25.0%
770 The City Drive South
Suite 3700
Orange, California 92868
All executive officers and
directors as a group 5,212,000 44.9%
*Dennis is the record owner of 500,000 shares, he and Susan Shen jointly own
1,806,000 shares, they share voting and investment power of 774,000 shares
held by Susan's mother, Ming-Chau Yeung.
ITEM 5: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our directors, executive officers and key employees and their respective
ages and positions are set forth below. Biographical information for each of
those persons is also presented below. Our executive officers are appointed
by our Board of Directors and serve at its discretion. Dennis and Susan Shen
are married.
Directors and Officers
Name Age Position Held
- ---- --- -------------
Jack Tortorice 50 Chief Executive Officer and Chairman of
the Board
Dennis Shen 32 President and Director
Susan Shen 29 Secretary/Treasurer
Thomas J. Rotert 33 Director
Jack Tortorice. Chief Executive Officer and Director since April of
1999. He served as CEO, Chairman of the Board and a Director of Pacific Link
from October 1997 to May 1999. Prior to joining Pacific Link he was general
manager for the sales and marketing division of Frontier Communications from
January 1995 to June 1997. Prior positions include: General manager for sales
and operations of ITT Courier related to computer equipment sales; Vice
President of Sales for Automatic Data Processing selling payroll outsourcing;
and sales positions for Wang Labs and Xerox. Mr. Tortorice graduated with an
Masters in Business Administration from Pepperdine University in 1989 and
received a bachelor's degree in economics from Edinboro in Pennsylvania in
1973.
Dennis Shen. President and a Director since April of 1999. In May of
1992 Mr. Shen was the founder, President and Chief Information Officer for
Global Pacific, which later became Pacific Link. He was responsible for
network design and implementation and later led the transition of that company
from a computer reseller to an Internet service provided in 1995. Mr Shen has
extensive experience in large-scale wireless network implementations. He was
a featured speaker at World Expo '94 and Unlicenced Spectrum-Wireless Internet
Access in 1999.
14
<PAGE>
Susan Shen. Secretary and Chief Financial Officer since April of 1999.
Mrs. Shen is responsible for accounting and human resources activities for
Worldwide Wireless. She joined Global Pacific in May of 1995 as an
accountant, and subsequently became the Chief Financial Officer of that
company in August of 1996. She has prior experience in computer sales and was
employed as a purchasing agent. She received a bachelor's degree in
mathematics from California State Politechnic University, Pamona in 1994.
Thomas J. Rotert. Mr. Rotert was appointed as a Director on October 1,
1999. He also serves as our general counsel. He is a licensed attorney in
the state of California and practices in the areas of corporate transactional
law and civil litigation. From May 1998 to the present, he has been a partner
in the law firm of Schuman & Associates, located in Costa Mesa, California.
From October 1997 through May 1998 he was employed as an attorney for Sayer &
Associates, a California firm. He was litigation counsel for Bollington &
Roberts, another California firm, from 1992 to October 1997. He received a
juris doctorate from Western State University in 1993 and a bachelor's from
the University of Kansas in 1989. Mr. Rotert filed a Chapter 7 voluntary
bankruptcy petition in February 1998 in the Central District of California
Division of the United States Bankruptcy Court, which was discharged in June
of 1998.
ITEM 6: EXECUTIVE COMPENSATION
The following table shows compensation of our executive officers for our
last completed fiscal year.
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
Other
Fiscal Annual
Name and Principal Position Year Salary ($) Bonus Compensation
- --------------------------- ---- ---------- ----- ------------
Jack Tortorice 1998 $50,000 $0 $0
Chief Executive Officer
and Director
Dennis Shen 1998 50,000 0 0
President and Director
Susan Shen 1998 0 0 0
Chief Financial Officer
and Secretary
Compensation of Directors
We do not have any standard arrangement for compensation of our directors
for any services provided as director, including services for committee
participation or for special assignments.
Employment Contracts
On January 1, 1999, we amended the employment agreements with Messrs.
Tortorice and Shen. Each agreement is for an initial term of five years,
terminating on December 31, 2003. However, the agreement automatically renews
for one year for the next four years after the initial term. Mr. Tortorice
receives a salary of $98,000 per year and Mr. Shen receives a salary of
$70,000 per year. Both have a $500 car allowance per month and will be
reimbursed for expenses incurred on our behalf. We may terminate the
agreement for cause, as defined in the agreement. Pursuant to the agreement,
if we terminate the agreement we have agreed to buy back their original
shares, 3,500 common shares, for $25 a share and we will distribute a pro rata
share of profits to each of
15
<PAGE>
them. Messrs. Tortorice and Shen may terminate the agreement by giving us 30
days notice.
ITEM 7: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following information summarizes certain transactions either we
engaged in during the past two years or we propose to engage in involving our
executive officers, directors, 5% stockholders or immediate family members of
such persons:
During the year ended December 31, 1997, we borrowed $15,000 from Ming
Chan Yeung, a shareholder and mother of Susan Shen, our Secretary/Treasurer.
The entire $15,000 was paid in April of 1999.
During 1999 and 1998 Worldwide Wireless has retained the law firm of
Schumann & Associates for various legal matters. Thomas J. Rotert, our
director, has personally provided such legal services. We have paid Schumann
& Associates approximately $24,000 in legal fees for the services rendered by
Mr. Rotert. Mr. Rotert has an approximate 30% interest in the law firm. We
intend to continue using the services of Schumann and Associates in the
future.
ITEM 8: DESCRIPTION OF SECURITIES
Common Stock
Pursuant to the Articles of Merger filed April 9, 1999 we are authorized
to issue 50,000,000 shares of common stock, par value $.001, of which
11,599,988 were issued and outstanding as of August 31, 1999. All shares of
common stock have equal rights and privileges with respect to voting,
liquidation and dividend rights. Each share of common stock entitles the
holder thereof (i) to one non-cumulative vote for each share held of record of
all matters submitted to a vote of the stockholders, (ii) to participate
equally and to receive any and all such dividends as may be declared by the
Board of Directors out of funds legally available; and (iii) to participate
pro rata in any distribution of assets available for distribution upon our
liquidation. Our stockholders have no preemptive rights to acquire additional
shares of common stock or any other securities. All outstanding shares of
common stock are fully paid and non-assessable.
Preferred Stock
We have not authorized or issued any preferred stock.
Change in Control
In September of 1998 Pacific Link entered into an options agreement with
DFL Capital Partners, LLC. According to the agreement DFL Capital Partners,
LLC was granted the option to buy 50,000 common shares at $0.10 per share.
The right to exercise the option vested immediately and remained exercisable
for ten (10) years The amount of common shares subject to the options would
adjust according to recapitalizations of Pacific Link. The parties to this
agreement are currently in a dispute as to the application of this agreement
to our common shares. We may have up to 700,000 common shares subject to
these options and if the optionee exercises the options it may become a 5%
shareholder.
<PAGE>
PART II
ITEM 1: MARKET PRICE FOR COMMON EQUITY AND DIVIDENDS
OF WORLDWIDE WIRELESS AND OTHER SHAREHOLDER MATTERS
Our common stock is traded over-the-counter and quoted on the OTC NASDAQ
Electronic Bulletin Board under the symbol "WWWN". The following table
represents the range of the high and low bid prices of our stock
16
<PAGE>
as reported by the Nasdaq Trading and Market Services for each fiscal quarter
for the last two fiscal years ending December 31, 1998 and the eight month
interim period ended August 31, 1999. Such quotations represent prices
between dealers and may not include retail markups, markdowns, or commissions
and may not necessarily represent actual transactions.
Year Quarter High Low
---- ------- ---- ---
1997 Third Quarter 0.25 0.125
Fourth Quarter 0.13 0.13
1998 First Quarter 0.125 0.1
1999 First Quarter 4.0 4.0
Second Quarter 6.0 0.40625
Third Quarter 4.75 2.875
During 1997 and 1998 our market was sporadically and thinly traded.
There was no trading activity during the second, third and fourth quarters of
1998. Trading activity increased in August of 1999. The price per share of
companies similarly situated to Worldwide Wireless have exhibited extreme
volatility in response to company specific information as well as general
market conditions. Shareholders should consider the possibility of the loss
of the entire value of their shares.
As of August 31, 1999, we had approximately 36 stockholders of record.
Management controls 44.9% of our outstanding shares. We have 400,000 common
shares subject to warrants and 7,358,160 common shares subject to the resale
limitations of Rule 144. We may have 50,000 to 700,000 common shares subject
to options pending the resolution of a disputed options contract entered into
by Pacific Link in September of 1998. (See, "Part I, Item 8: Description of
Securities - Change in Control", above)
Dividends
We have not declared dividends on our common stock and do not anticipate
paying dividends on our common stock in the foreseeable future.
Stock Splits
In June 1998, our Board of Directors authorized a 30-for-1 reverse split
of our common stock. In March 1999, our Board of Directors authorized a 4-
for-1 forward split of our common stock. All per share information in this
registration statement has been retroactively restated to reflect these
changes.
OTC Bulletin Board Eligibility Rule
In January of 1999, the SEC granted approval of amendments to the NASD
OTC Bulletin Board Eligibility Rule 6530 and 6540. These amendments now
require a company listed on the OTC Bulletin Board to be a reporting company
and current in its reports filed with the SEC. As a result of this rule
change we have voluntarily filed this registration statement in order to
become a fully reporting company and maintain the listing of our common stock
on the OTC Bulletin Board. The rule requires that the SEC come to a position
of no further comment regarding the registration statement before a company is
considered compliant. We cannot assure that the SEC will come to such a
position in regards to this registration statement prior to our phase-in date
of March 1, 2000. According to the rules, if we are not in compliance at our
phase-in-date our common stock will be removed from the OTC Bulletin Board. At
that time we intend to move our listing to the National Quotation Bureau's
Pink Sheets. This possible move to the "pink sheets" may adversely affect the
market, if any, in our stock.
ITEM 2: LEGAL PROCEEDINGS
We are not involved in any material pending legal proceedings, other than
routine litigation incidental to our business, to which we are a party or of
which any of our property is subject.
18
<PAGE>
ITEM 3: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have had no change in, or disagreements with, our principal
independent accountant during our last two fiscal years.
ITEM 4: RECENT SALES OF UNREGISTERED SECURITIES
The following discussion describes all securities we have sold within the
past three fiscal years without registration:
On March 21, 1997, we issued an aggregate of 1,332 common shares, valued
at $10, to our then president and director, Cheryl A. Jamison, for services as
an officer and director. The issuance of such shares was exempt from
registration under the Securities Act of 1933 by reason of Sections 3(b) and
4(2) as a private transaction not involving a public distribution.
On June 18, 1998, we issued an aggregate of 4,512,500 common shares
valued at $7,898, to eight persons pursuant to Rule 504. 800,000 of such
shares were subsequently canceled due to lack of consideration. Such shares
were issued for services rendered for or on our behalf. No underwriting
discounts or commissions were paid for this offering.
On January 15, 1999, we issued an aggregate of 322,144 common shares.
122,144 common shares, valued at $950, were issued to Mutual Ventures
Corporation for investment banking services and 200,000 common shares were
issued to Badland Securities, Inc. for $1,000,000 cash. The issuance of such
shares was exempt from registration under the Securities Act of 1933 by reason
of Sections 3(b) and 4(2) as a private transaction not involving a public
distribution.
On June 1, 1999, we agreed to issue warrants to Columbia Financial Group
in consideration for services rendered on our behalf. The warrants are
exercisable until May 31, 2004 for an aggregate of 400,000 common shares at an
aggregate exercise price of $1,700,000. The issuance of such shares was
exempt from registration under the Securities Act of 1933 by reason of
Sections 3(b) and 4(2) as a private transaction not involving a public
distribution.
On June 10, 1999, we sold 400,000 common shares to Andrew Taubman for
$100,000. The issuance of such shares was exempt from registration under the
Securities Act of 1933 by reason of Sections 3(b) and 4(2) as a private
transaction not involving a public distribution.
In each of the private transactions above, we believe that each purchaser
(i) was aware that the securities had not been registered under federal
securities laws, (ii) acquired the securities for his/her/its own account for
investment purposes of the federal securities laws, (iii) understood that the
securities would need to be indefinitely held unless registered or an
exemption from registration applied to a proposed disposition and (iv) was
aware that the certificate representing the securities would bear a legend
restricting its transfer. We believe that, in light of the foregoing, the
sale of our securities to the respective acquirers did not constitute the sale
of an unregistered security in violation of the federal securities laws and
regulations by reason of the exemptions provided under Sections 3(b) and 4(2)
of the Securities Act, and the rules and regulations promulgated thereunder.
ITEM 5: INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation and bylaws provide for the indemnification
of present and former directors and officers and each person who serves at our
request as our officer or director. To the full extent of Nevada Revised
Statutes Sections 78.7502 and 78.751 indemnification for a director is
mandatory and indemnification for an officer, agent or employee is permissive.
We will indemnify such individuals against all costs, expenses and liabilities
reasonably incurred in a threatened, pending or completed action, suit or
proceeding brought because such individual is our director or officer. Such
individual must have conducted himself in good faith and reasonably
18
<PAGE>
believed that his conduct was in, or not opposed to, our best interest. In a
criminal action he must not have had a reasonable cause to believe his conduct
was unlawful. This right of indemnification shall not be exclusive of other
rights the individual is entitled to as a matter of law or otherwise.
We will not indemnify an individual adjudged liable due to his negligence
or wilful misconduct toward us, adjudged liable to us, or if he improperly
received personal benefit. Indemnification in a derivative action is limited
to reasonable expenses incurred in connection with the proceeding. Also, we
are authorized to purchase insurance on behalf of an individual for
liabilities incurred whether or not we would have the power or obligation to
indemnify him pursuant to our bylaws.
PART F/S
INDEX TO FINANCIAL STATEMENTS
Worldwide Wireless Networks, Inc. and Pacific Link Internet, Inc., its
subsidiary (DBA Global Pacific Internet, Inc.) Consolidated Financial
Statements June 30, 1999 (unaudited) and December 31, 1998.
Page
Independent Accountants Report F-3
Consolidated Balance Sheets F-4
Consolidated Statement of Operations F-6
Consolidated Statement of Stockholders Equity F-7
Consolidated Statement of Cash Flow F-8
Notes to Financial Statements F-10
Interim Financial Statements, for the period ended
August 31, 1999
19
<PAGE>
Worldwide Wireless Networks, Inc. and
Pacific Link Internet, Inc. its subsidiary
(DBA Global Pacific Internet, Inc.)
Consolidated Financial Statements
June 30, 1999(unaudited) and December 31, 1998
<PAGE> 20
C O N T E N T S
Accountants' Report 3
Consolidated Balance Sheets 4
Consolidated Statements of Operations 6
Consolidated Statements of Stockholders' Equity 7
Consolidated Statements of Cash Flows 8
Notes to the Consolidated Financial Statements 9
<PAGE> 21
<Letterhead of Crouch, Bierwolf & Chisholm, Certified Public Accountants
50 West Broadway, Suite 1130, Salt Lake City, Utah 84101, appears here>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Pacific Link Internet, Inc.:
We have audited the accompanying consolidated balance sheets of Pacific Link
Internet, Inc. as of December 31, 1998 and the related consolidated
statements of operations, stockholders' equity and cash flows for the year
ended December 31, 1998 and from inception on August 1, 1997 through December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pacific Link Internet, Inc.
as of December 31, 1998 and the results of its operations and cash flows for
the year ended December 31, 1998 and from inception on August 1, 1997 through
December 31, 1997 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has recurring operating losses and is
dependent upon financing to continue operations. These factors raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in the Note
2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
February 24, 1999
<PAGE> 22
Worldwide Wireless Networks, Inc.
Consolidated Balance Sheets
ASSETS
------
June 30 December 31
1999 1998
------------ ------------
CURRENT ASSETS (unaudited)
Cash (Note 1) $ 52,100 $ -
Accounts receivable (net of allowance for
doubtful accounts of $2,200 and
$2,200, respectively) 192,286 29,340
Accounts receivable-related party (Note 3) 54,814 54,814
Employee advance 951 -
Inventory 25,685 -
Prepaid Expenses 27,097 -
------------ ------------
Total Current Assets 352,933 84,154
------------ ------------
PROPERTY & EQUIPMENT (Note 1)
Office equipment 82,583 28,833
Leased equipment 209,751 209,751
Machinery equipment 603,255 226,878
------------ ------------
895,589 465,462
Less:
Accumulated depreciation -
leased equipment (165,070) (130,111)
Accumulated depreciation (107,250) (28,491)
------------ ------------
Total Property & Equipment 623,269 306,860
------------ ------------
OTHER ASSETS
Deferred Charges (Note 1) 28,876 10,428
Deposits 25,522 15,184
------------ ------------
Total Other Assets 54,398 25,612
------------ ------------
TOTAL ASSETS $ 1,030,600 $ 416,626
============ ============
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 23
Worldwide Wireless Networks, Inc.
Consolidated Balance Sheets continued
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
June 30 December 31
1999 1998
------------ ------------
(unaudited)
CURRENT LIABILITIES
Bank overdrafts $ - $ 4,092
Accounts payable 459,904 522,337
Accrued expenses - -
Lines of credit (Note 5) 95,936 98,471
Unearned revenue (Note 1) 135,661 23,542
Current portion of long-term
liabilities (Note 4) 50,000 102,517
------------ ------------
Total Current Liabilities 741,501 750,959
------------ ------------
LONG TERM LIABILITIES (Note 4)
Unearned Revenue (Note 1) - 17,948
Notes payable 6,277 9,277
Notes payable-related party - 31,300
Capital lease obligations 55,248 88,190
Less current portion (50,000) (102,517)
------------ ------------
Total long term Liabilities 11,525 44,198
------------ ------------
TOTAL LIABILITIES 753,026 795,157
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, 25,000,000
shares of $.001 par value
authorized, 11,599,988 and
500,000 shares issued
and outstanding 11,600 500
Additional paid in capital 1,193,545 104,645
Retained earnings (927,571) (483,676)
------------ ------------
Total Stockholders' Equity 277,574 (378,531)
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,030,600 $ 416,626
============ ============
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 24
Worldwide Wireless Networks, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
From
inception on
For the six For the year August 1,1997
months ended ended through
June 30 December 31 December 31
1999 1998 1997
------------ ------------ ------------
(unaudited)
<S> <C> <C> <C>
REVENUES $ 657,385 $ 841,841 $ 271,841
COST OF SALES 260,285 430,600 189,382
------------ ------------ ------------
GROSS PROFIT 397,100 411,241 82,459
------------ ------------ ------------
SELLING EXPENSES 174,428 158,592 68,827
GENERAL & ADMINISTRATIVE EXPENSES 657,915 455,126 138,939
------------ ------------ ------------
TOTAL OPERATING EXPENSES 832,343 613,718 207,766
------------ ------------ ------------
OPERATING INCOME (LOSS) (435,243) (202,477) (125,307)
------------ ------------ ------------
OTHER INCOME AND (EXPENSES)
Miscellaneous income 11,952 19,410 6,163
Interest expense (15,739) (51,455) (18,692)
Bad debts (4,865) (94,861) (15,657)
------------ ------------ ------------
Total Other Income and (Expenses) (8,652) (126,906) (28,186)
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (443,895) (329,383) (153,493)
PROVISION FOR INCOME TAXES (Note 1) - 800 -
============ ============ ============
NET INCOME (LOSS) $ (443,895) $ (330,183) $ (153,493)
============ ============ ============
NET INCOME (LOSS) PER SHARE $ (.05) $ (.05) $ (.02)
============ ============ ============
WEIGHTED AVERAGE
OUTSTANDING SHARES 9,383,327 6,500,000 6,426,667
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE> 25
Worldwide Wireless Networks, Inc.
Consolidated Statements of Stockholders' Equity
From inception on August 1, 1997 through December 31, 1998
and June 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Additional Retained
Common Stock Paid in Earnings
Shares Amount Capital (Deficit)
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Balance at inception on
August 1, 1997 - $ - $ - $ -
Shares issued to organizers for cash 420,000 420 2,080 -
Net income (loss) for the period
ended December 31, 1997 - - - (153,493)
------------ ------------ ------------ ------------
Balance on December 31, 1997 420,000 420 2,080 (153,493)
Shares issued for cash 80,000 80 102,565 -
Net income (loss) for the year
ended December 31, 1998 - - - (330,183)
------------ ------------ ------------ ------------
Balance on December 31, 1998 500,000 500 104,645 (483,676)
April 1999 - Reverse acquisition
and reorganization adjustment 10,499,988 10,500 (10,500) -
Stock issued for cash at $5 per share 200,000 200 999,800 -
Stock issued for cash at $.25 per share 400,000 400 99,600 -
Net income (loss) for the six months
ended June 30, 1999 (unaudited) - - - (443,895)
------------ ------------ ------------ ------------
Balance on June 30, 1999 (unaudited) 11,599,988 $ 11,600 $1,193,545 $ (927,571)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE> 26
Worldwide Wireless Networks, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
From
inception on
For the six For the year August 1,1997
months ended ended through
June 30 December 31 December 31
1999 1998 1997
------------ ------------ ------------
(unaudited)
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (443,895) $ (330,183) $ (153,493)
Non-cash items:
Depreciation & amortization 113,718 97,736 26,362
Bad debt - 94,836 15,657
(Increase)/decrease in current assets:
Accounts receivable (162,946) (17,401) (14,114)
Accounts receivable-related party - (39,486) (18,853)
Employee advance (951) - -
Prepaid Expenses (27,097) 3,263 (3,263)
Deferred Charges (18,448) (10,428) -
Inventory (25,685) - -
Increase/(decrease) in current
liabilities:
Bank overdraft (4,092) 4,092 -
Accounts payable (64,028) 336,665 128,317
Accrued expenses - - -
Unearned revenue 94,171 41,490 -
------------ ------------ ------------
Net Cash Provided (Used) by
Operating Activities (539,253) 180,584 (19,387)
------------ ------------ ------------
Cash Flows from Investing Activities
Purchase of property and equipment (430,127) (187,411) (57,269)
Cash paid for deposits (10,338) (6,113) (9,071)
------------ ------------ ------------
Net Cash Provided (Used) by
Investing Activities (440,465) (193,524) (66,340)
------------ ------------ ------------
Cash Flows from Financing Activities
Advances on line of credit - 3,860 54,719
Cash paid on line of credit (2,535) - -
Cash from sale of stock 100,000 72,645 32,500
Cash received from debt financing - - 35,000
Principal payments on long-term debt (65,647) (64,519) (35,538)
Cash received in merger with
Worldwide 1,000,000 - -
------------ ------------ ------------
Net Cash Provided (Used) by
Financing Activities 1,031,818 11,986 86,681
------------ ------------ ------------
Increase/(decrease) in Cash 52,100 (954) 954
Cash and Cash Equivalents at
Beginning of Period - 954 -
------------ ------------ ------------
Cash and Cash Equivalents at End
of Period $ 52,100 $ - $ 954
============ ============ ============
Supplemental Cash Flow Information:
Cash paid for interest $ 15,739 $ 61,725 $ 8,422
Cash paid for income taxes $ - $ - $ -
Non-cash financing transaction:
Purchase of equipment with lease
obligations $ - $ 24,784 $ 184,967
</TABLE>
The accompanying notes are an integral part of these financial statements.
-8-
<PAGE> 27
Worldwide Wireless Networks, Inc.
Notes to the Financial Statements
December 31, 1998 and June 30, 1999 (Unaudited)
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
The audited financial statements presented for December 31, 1998 and
1997, are those of Pacific Link Internet, Inc. (The Company). The Company was
incorporated under the laws of the State of California on September 22, 1997,
however operations began on August 1, 1997. The Company provides wireless
internet access to business and individuals. The Company's headquarters are
located in Orange, California.
On April 1, 1999 the Company merged with Worldwide Wireless Networks,
Inc. (Worldwide) a public shell with no operations, and changed the name to
Worldwide Wireless Networks, Inc. Worldwide was organized in the State of
Nevada on June 10, 1992. Worldwide recently raised $1,000,000 in anticipation
of the merger, and provided this as the only asset to the newly combined
organization. The merger was treated as a reverse merger for accounting
purposes, therefore the June 30, 1999 period is consolidated and the December
31,1998 and 1997 is that of the accounting acquirer (Pacific Link Internet,
Inc.) only.
b. Recognition of Revenue, Deferred Charges, Unearned Revenue
The Company recognizes income and expense on the accrual basis of
accounting. During October and November 1998, the Company entered into various
sales agreements whereby, a third party financial institution pays a factored
sales amount to the Company for sales contracts received from customers with
terms of 1 to 3 years. The Company has deferred the revenue on these contracts
to be recognized over the time of the contract. Unearned revenue has been
established on the books in order to defer the revenues received from the third
party on these contracts. The corresponding factoring fee has been deferred as
an asset called "deferred charges" and is also recognized over the life of the
contract. All other sales are recorded when the services are completed.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements. The 1998 and 1997 weighted average shares have been retroactively
restated for the 7,000,000 shares issued in the merger for comparability
purposes.
-9-
<PAGE> 28
Worldwide Wireless Networks, Inc.
Notes to the Financial Statements
December 31, 1998 and June 30, 1999 (Unaudited)
NOTE 1 - Summary of Significant Accounting Policies (continued)
d. Provision for Income Taxes
No provision for income taxes has been recorded due to net operating
loss carryforwards totaling approximately $480,000 that will be offset against
future taxable income. These NOL carryforwards begin to expire in the year
2013. No tax benefit has been reported in the financial statements because the
Company believes there is a 50% or greater chance the carryforward will expire
unused.
Deferred tax assets and the valuation account is as follows at
December 31, 1998 and June 30, 1999.
1999 1998
------------ ------------
Deferred tax asset:
NOL carrry forward $ 315,000 $ 163,000
Valuation allowance (315,000) (163,000)
Total $ - $ -
e. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
f. Property and Equipment
Expenditures for property and equipment and for renewals and
betterments, which extend the originally estimated economic life of assets or
convert the assets to a new use, are capitalized at cost. Expenditures for
maintenance, repairs and other renewals of items are charged to expense. When
items are disposed of, the cost and accumulated depreciation are eliminated from
the accounts, and any gain or loss is included in the results of operations.
The provision for depreciation is calculated using the straight-line
method over the estimated useful lives of the assets. Depreciation expense for
the period ended June 30, 1999, December 31,1998 and 1997 is $113,718, $97,736
and $26,362, respectively.
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has suffered
recurring operating losses and is dependent upon raising capital to continue
operations. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty. It is managements plan to merge
with a public company, register its stock and raise capital from the public
market in order to expand its operations to a profitable level.
-10-
<PAGE> 29
Worldwide Wireless Networks, Inc.
Notes to the Financial Statements
December 31, 1998 and June 30, 1999 (Unaudited)
NOTE 3 - Related Party Transactions
During the year ended December 31, 1997, the Company borrowed $15,000
from Ming Chan Yeung, a shareholder of the Company, the entire $15,000 is
outstanding at December 31, 1998, and $0 at June 30, 1999.
During the year ended December 31, 1998, the Company borrowed $16,300
from Zhi Gang Zhang, a shareholder of the Company, the entire $16,300 is
outstanding at December 31, 1998, and $0 at June 30, 1999.
NOTE 4 - Long-Term Liabilities
Long Term Liabilities are detailed in the following schedules as of
December 31, 1998 and June 30, 1999.
December 31 June 30
Notes payable is detailed as follows: 1998 1999
----------- -------
Note payable to a corporation, payments due
monthly of $500 through July 2000, bears
interest at 7%, secured by equipment and
other assets. 9,277 6,277
----------- -------
Total Notes Payable 9,277 6,277
----------- -------
Notes payable related party is detailed as follows:
Note payable to a shareholder, non interest
bearing, due upon demand, unsecured note $ 15,000 $ -
Note payable to a shareholder, non interest
bearing, due upon demand, unsecured note 16,300 -
----------- -------
Total notes payable - related party 31,300 -
----------- -------
Capital lease obligations are detailed in the following schedule as of December
31, 1998 and June 30, 1998:
Capital lease obligation to a corporation
for antenna equipment, lease payments due
monthly of $710 through January 2001,
bears interest at 19.7%, secured by antenna
equipment. $ 13,790 $ 11,506
-11-
<PAGE> 30
Worldwide Wireless Networks, Inc.
Notes to the Financial Statements
December 31, 1998 and June 30, 1999 (Unaudited)
NOTE 4 - Long-Term Liabilities (continued)
December 31 June 30
1998 1998
----------- ------------
Capital lease obligation to a corporation
for wireless equipment, lease payments due
monthly of $175 through May 2001,
bears interest at 18%, secured by
wireless equipment. $ 4,091 $ 3,606
Capital lease obligation to a corporation
for wireless equipment, lease payments due
monthly of $1,244 through October 2000,
bears interest at 15.5%, secured by wireless
equipment. 23,689 18,878
Capital lease obligation to a corporation
for equipment, lease payments due monthly
of $1,248 through December 1999, bears
interest at 32.5%, secured by equipment. 12,644 6,828
Capital lease obligation to a corporation
for equipment, lease payments due monthly
of $841 through October 1999, bears
interest at 17%, secured by equipment. 7,792 3,249
Capital lease obligation to a corporation
for equipment, lease payments due monthly
of $721 through January 2000, bears
interest at 19.4%, secured by equipment. 8,388 4,733
Capital lease obligation to a corporation
for equipment, lease payments due monthly
of $545 through August 1999, bears
interest at 19.2%, secured by equipment. 3,582 536
Capital lease obligation to a corporation
for equipment, lease payments due monthly
of $997 through December 1999, bears
interest at 24.1%, secured by equipment. 10,532 5,580
Capital lease obligation to a corporation
for equipment, lease payments due monthly
of $680 through January 1999, bears
interest at 24.1%, secured by equipment. 667 -
-12-
<PAGE> 31
Worldwide Wireless Networks, Inc.
Notes to the Financial Statements
December 31, 1998 and June 30, 1999 (Unaudited)
NOTE 4 - Long-Term Liabilities (continued)
December 31 June 30
1998 1998
----------- ------------
Capital lease obligation to a corporation
for equipment, lease payments due monthly
of $338 through July 1999, bears
interest at 19.1%, secured by equipment. $ 2,219 $ 332
Capital lease obligation to a corporation
for equipment, lease payments due monthly
of $205 through April 1999, bears
interest at 15.2%, secured by equipment. 796 -
----------- ------------
Total Lease Obligations 88,190 55,248
----------- ------------
Total long term liabilities 128,767 61,525
Less current portion of:
Notes payable 5,526 5,443
Notes payable - related party(note 2) 31,300 -
Capital lease obligations 65,691 44,557
----------- ------------
Total current portion 102,517 50,000
----------- ------------
Net Long Term Liabilities $ 26,250 $ 11,525
=========== ============
Future minimum principal payments on notes payable are as follows at December
31, 1998:
1999 36,826
2000 3,751
--------
Total notes payable $40,577
========
Future minimum lease payments are as follows at December 31, 1998:
1999 77,228
2000 23,780
2001 1,585
--------
102,593
Less portion representing interest (13,243)
--------
Total $89,350
========
-13-
<PAGE> 32
Worldwide Wireless Networks, Inc.
Notes to the Financial Statements
December 31, 1998 and June 30, 1999 (Unaudited)
NOTE 5 - Lines of Credit
The Company has two lines of credit with two banks with total credit of $56,000
The average interest rate is 11.75%. The balances due at December 31, 1998 and
June 30, 1999 were $95,471 and $95,936, respectively.
NOTE 6 - Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting period. In these financial statements, assets,
liabilities, revenues and expenses involve reliance on management's estimates.
Actual results could differ from those estimates.
NOTE 7 - Commitments and Contingencies
The Company has an operating lease for office space. Monthly lease payments are
due of $2,549 for sixty months starting May 1, 1998 and ending April 30, 2003.
The Company has an operating lease for antenna space on a roof. The agreement
calls for monthly payments of $350 the first six months, $450 the next six
months, and $500 for the remaining 48 months of the sixty-month contract. The
lease began on September 15, 1998 and ends on August 31, 2003.
The Company has an operating lease for office space. Monthly lease payments are
due of $4,021 for sixty months starting October 15, 1998 and ending September
30, 2003.
The Company has an operating lease for office space. Monthly lease payments are
due of $10,083 and the lease expires in March 2004.
The Company has an operating lease for roof space. Monthly lease payments are
due of $250 for sixty months starting September 15, 1998 and ending August 31,
2003.
The Company has an operating lease for roof space. Monthly lease payments are
due of $300 for sixty months starting November 16, 1998 and ending October 31,
2003.
The Company has an operating lease for roof space that could potentially secure
up to three antennas. The agreement calls for minimum monthly payments for the
initial antenna of $1,000 the first twelve months, $1,050 the next twelve
months, $1,103 the following twelve months, $1,158 the next twelve months, and
$1,216 for the remaining twelve months of the sixty-month contract. Each
additional antenna (limit of three total) will require monthly payments of $750
the first twelve months, $788 the next twelve months, $827 the following twelve
months, $868 the next twelve months, and $912 the remaining twelve months. The
lease began on October 1, 1998 and ends on September 30, 2003.
-14-
<PAGE> 33
Worldwide Wireless Networks, Inc.
Notes to the Financial Statements
December 31, 1998 and June 30, 1999 (Unaudited)
NOTE - 7 Commitments and Contingencies (continued)
The Company has an operating lease for roof space. Monthly lease payments are
due of $500 for use of a one directional antenna or $650 for use of a two
directional antenna for sixty months starting October 1, 1998 and ending
September 30, 2003.
The Company has an operating lease for roof space. Monthly lease payments are
due of $250 for thirty-six months starting December 2, 1998 and ending November
30, 2001.
Future minimum operating lease payments are as follows at December 31, 1998:
1999 $ 234,195
2000 234,195
2001 234,587
2002 232,506
2003 191,825
----------
Total $1,127,308
The Company is obligated under employment contracts to officers of the Company
through December 31, 2003, for $110,000 total compensation per year.
NOTE - 8 Unaudited Information
The June 30, 1999 consolidated information furnished herein was taken from the
books and records of the Company without audit. However, such information
reflects all adjustments which are, in the opinion of management, necessary to
properly reflect the results of the six months then ended. The information
presented is not necessarily indicative of the results from operations expected
for the full year.
NOTE 9 - Reverse Acquisition and reorganization
Effective April 1, 1999, Pacific Link Internet, Inc. (Pacific) was acquired by
Worldwide Wireless Internet, Inc. (Worldwide). Worldwide issued 7,000,000
shares to the shareholders of Pacific in exchange for all shares of Pacific,
thus making it a wholly owned subsidiary of Worldwide. Due to the financial
history being that of Pacific a reverse acquisition and reorganization
adjustment is necessary to bring the equity accounts up to the correct
consolidated total at June 30, 1999.
-15-
<PAGE> 34
Worldwide Wireless Networks, Inc.
Balance Sheet
August 31, 1999
ASSETS
Current Assets
Cash on Hand 6,760.91
Checking Account GPT WF1 <25.10>
Checking Account GPI WF2 <77.18>
Checking Account PLI WF3 67,741.57
Checking Account WWWN WF4 224.75
Savings Account PLI WF5 108,588.05
Sanwa Bank Checking 7.06
Accounts Receivable 191,105.61
Allowance for Doubtful Accts <5,000.00>
Other Receivables 1,820.00
Loan to Officer - Dennis 13,174.64
Loan to Officer - Jack 31,173.98
Loan to Officer - Sean 10,465.33
Inventory 21,151.90
Prepaid Expenses 2,600.00
Employee Advances 497.00
Other Current Assets 1,500.00
----------------
Total Current Assets 451,708.52
Property and Equipment
Furniture and Fixtures 29,350.00
Equipment - Office 64,826.86
Equipment - Network 191,941.33
Equipment - Leased 209,751.30
DSL Equipment 20,366.00
Company Web Site 6,174.23
Equipment - Wireless Pop Sites 457,798.29
Equipment - Wireless Customer 168,755.54
Accum. Depr - Furn & Fixtures <2,315.57>
Accum. Depr. - Office Equip <6,869.99>
Accum. Depr - Network Equip <31,945.16>
Accum. Depr.-Leased Equipment <176,722.62>
Accum Depr. DSL Equipment <2,729.67>
Accum. Depr. - Co. Web Site <1,064.92>
Accum. Depr. - Wireless P.S. <82,098.74>
Accum. Depr. - Wireless Cust <26,887.45>
----------------
Total Property and Equipment 818,329.43
Other Assets
Prepaid Commission 24,410.65
Deferred Charges 28,359.50
Deposits 25,521.71
----------------
Total Other Assets 78,291.86
----------------
Total Assets $ 1,348,329.81
================
LIABILITIES AND CAPITAL
Current Liabilities
Garnishments Payable 899.48
Accounts Payable 666,778.00
Accrued Interest 880.37
Sales Tax Payable 4,996.77
Suspense - Clearing Account <5,553.89>
----------------
Total Current Liabilities 668,000.73
Long-Term Liabilities
BOA Credit Line 2,499.92
Sanwa Bank Credit Line 40,668.46
Glendale Federal Credit Line 49,673.34
Deferred Revenue 131,899.50
Unaudited - For Management Purposes Only
<PAGE> 35
Worldwide Wireless Networks, Inc.
Balance Sheet
August 31, 1999
Capital Lease Payable 45,731.70
Note Payable - AT 50,000.00
Note Payable - PH 250,000.00
Other Payables 1,595.24
Note Payable-Chausse-Noncurr 5,277.00
----------------
Total Long-Term Liabilities 577,345.16
----------------
Total Liabilities 1,245,345.89
Capital
Common Stock 2,500.00
Jack's Capital - Beg 37,898.93
Retained Earnings <483,675.63>
Investor's Capital - Beg 1,064,745.60
Add'l Paid -in-Capital 100,000.00
Net Income <618,484.98>
----------------
Total Capital 102,983.92
----------------
Total Liabilities & Capital $ 1,348,329.81
================
Unaudited - For Management Purposes Only>
<PAGE> 36
Worldwide Wireless Networks, Inc.
Income Statement
For the Eight Months Ending August 31, 1999
Current Month Year to Date
------------- ------------
Revenues
Income - Dial Up 13,872.74 7.66 134,441.80 12.71
Income - Reseller Recurring 2,497.95 1.38 38,187.65 3.61
Income - Reseller New 0.00 0.00 0.00 0.00
Income - Nationwide Dial Up 0.00 0.00 0.00 0.00
Income - Co-Location Recurring 1,702.00 0.94 30,646.42 2.90
Income - Co-Location New 0.00 0.00 0.00 0.00
Income - Wirless Bandwidth 62,071.56 34.26 381,638.08 36.07
Income - Wirless Set Up 30,364.00 16.76 177,177.58 16.74
Income - Leased Line/ T1 Rec 13,494.06 7.45 58,984.12 5.57
Income - Leased Lines/T1 New 0.00 0.00 0.00 0.00
Income - Labor - Web Page 0.00 0.00 0.00 0.00
Income - Labor - Set Up 1,400.00 0.77 60,498.75 5.72
Income - Referal Fee 0.00 0.00 0.00 0.00
Sales of Equipment 31,500.77 17.39 94,147.54 8.90
Sales of Software 0.00 0.00 399.00 0.04
Income - DSL Bandwidth 5,150.52 2.84 18,596.52 1.76
Income - DSL Set Up 4,730.00 2.61 18,313.00 1.73
Income -Wireless Blg Bandwidth 5,460.20 3.01 20,880.93 1.97
Income -Wireless Blg Set Up 300.00 0.17 800.00 0.08
Income - FR Wireless 7,483.00 4.13 25,155.90 2.38
Sales Returns and Allowances 1,000.00 0.55 <15,497.87> <1.46>
Sales Discounts <57.00> <0.03> <4,499.63> <0.43>
Interest Income 87.48 0.05 2,163.81 0.20
Income - Miscellaneous 100.00 0.06 16,101.68 1.52
------------- ------------
Total Revenues 181,157.28 100.00 1,058,135.28 100.00
------------- ------------
Cost of Sales
Telephone - T1 4,119.46 2.27 37,077.45 3.50
Telephone - T3 7,600.00 4.20 45,837.33 4.33
Telephone - ISDN 0.00 0.00 0.00 0.00
DSL Monthly Fees 8,995.57 4.97 25,922.24 2.45
Telephone - Local Loop 28,091.09 15.51 141,678.42 13.39
Telephone - Dial Up 1,128.00 0.62 93,372.72 8.82
Set Up - Wiring 0.00 0.00 0.00 0.00
Set Up - Antenna 2,639.73 1.46 5,529.59 0.52
Antenna Equipment Leasing 0.00 0.00 0.00 0.00
Modem Equip Lease 0.00 0.00 0.00 0.00
Nationwide Access 0.00 0.00 0.00 0.00
Labor - Tech Support <475.00> <0.26> <475.00> <0.04>
Labor - Web Page 0.00 0.00 0.00 0.00
Labor - Installation 0.00 0.00 0.00 0.00
Equipment Purchases 24,311.88 13.42 74,165.42 7.01
Software Purchases 0.00 0.00 0.00 0.00
Cost of Sales- Freight 0.00 0.00 248.10 0.02
Inventory Adjustments 0.00 0.00 0.00 0.00
Rent - Roof Top Access 4,330.00 2.39 26,464.51 2.50
------------- ------------
Total Cost of Sales 80,740.73 44.57 449,820.78 42.51
------------- ------------
Gross Profit 100,416.55 55.43 608,314.50 57.49
------------- ------------
Expenses
Advertising - MicroTimes 1,788.00 0.99 14,363.50 1.36
Advertising - Computer Current 0.00 0.00 0.00 0.00
Advertising - OC Register 1,381.30 0.76 12,095.37 1.14
Advertising - LA Times 7,868.82 4.34 8,576.82 0.81
Advertising - Miscellaneous 0.00 0.00 325.94 0.03
Advertising - Direct Mailing 0.00 0.00 300.00 0.03
Advertising - Wiz Magazine 0.00 0.00 0.00 0.00
Advertising - Printed Material 0.00 0.00 4,288.50 0.41
Advertising - CD/disk 0.00 0.00 0.00 0.00
Advertising - Telemarketing 872.00 0.48 8,200.97 0.78
Amortization Expense 0.00 0.00 0.00 0.00
Unaudited - For Management Purposes Only
<PAGE> 37
Worldwide Wireless Networks, Inc.
Income Statement
For the Eight Months Ending August 31, 1999
Auto Expenses 2,034.89 1.12 14,062.26 1.33
Auto Leasing 0.00 0.00 0.00 0.00
Bad Debt Expense 2,800.00 1.55 7,666.62 0.72
Bank/Payroll Charges 190.70 0.11 4,142.63 0.39
Credit Card Exp 0.00 0.00 3,308.77 0.31
Cash Over and Short 0.00 0.00 0.00 0.00
Charitable Contributions Exp 0.00 0.00 200.00 0.02
Commissions and Fees Exp 30,581.71 16.88 112,313.61 10.61
Depreciation Expense 31,859.37 17.59 172,032.72 16.26
Dues and Subscriptions Exp 1,128.32 0.62 7,533.09 0.71
Employee Benefit Programs Exp 0.00 0.00 143.52 0.01
Equipment Leasing 357.00 0.20 2,916.42 0.28
Equipment Repairs 0.00 0.00 1,329.40 0.13
Group Insurance Expense 435.77 0.24 8,767.17 0.83
Insurance Expense 764.32 0.42 6,494.51 0.61
Interest Expense 3,086.57 1.70 22,028.58 2.08
Late Fees - Finance Charges 166.94 0.09 2,729.56 0.26
Lease Factoring Fee 1,789.84 0.99 11,717.73 1.11
Legal/Prof.-O/S Consulting 2,552.50 1.41 109,169.72 10.32
Licenses Expense 1,280.00 0.71 2,251.00 0.21
Loss on NSF Checks 0.00 0.00 0.00 0.00
Maintenance Expense 66.24 0.04 66.24 0.01
Meals and Entertainment Exp 461.99 0.26 5,646.20 0.53
Office Expense 94.00 0.05 4,028.53 0.38
Book and Software 0.00 0.00 4,955.66 0.47
Other Taxes 304.24 0.17 3,880.58 0.37
Payroll Tax Expense 8,209.99 4.53 49,781.63 4.70
Penalties and Fines Exp 0.00 0.00 3,307.86 0.31
Postage Expense 297.00 0.16 1,377.84 0.13
Rent 13,880.94 7.66 100,049.92 9.46
Salaries - Mgmt - Exec 22,891.66 12.64 156,271.04 14.77
Salaries - Office 11,525.33 6.36 62,731.00 5.93
Salaries - Sales 19,000.00 10.49 127,754.77 12.07
Salaries - Tech Support 15,413.67 8.51 81,991.09 7.75
Salaries - Installation 4,622.82 2.55 32,557.26 3.08
Salaries - Graphics 0.00 0.00 0.00 0.00
Shipping Expense 310.43 0.17 1,906.72 0.18
Supplies Expense 1,021.25 0.56 8,028.47 0.76
Seminar Expense 0.00 0.00 9,758.41 0.92
Telephone Expense 1,174.85 0.65 8,469.55 0.80
Tel Exp - Cellular/Radio 615.75 0.34 15,608.71 1.48
Tel Exp - Toll Free # 106.18 0.06 1,526.42 0.14
Travel Expense 4,526.84 2.50 12,843.70 1.21
Wages Expense 0.00 0.00 0.00 0.00
Miscellaneous Expense 40.00 0.02 3,670.58 0.35
Misc Expense - ComWorld 0.00 0.00 0.00 0.00
Purchase Disc- Expense Items 0.00 0.00 <7,100.18> <0.67>
Corporate State Tax Expense 0.00 0.00 729.07 0.07
------------- ------------
Total Expenses 195,501.23 107.92 1,226,799.48 115.94
------------- ------------
Net Income <95,084.68> <52.49> <618,484.98> <58.45>
============= ============
Unaudited - For Management Purposes Only
<PAGE> 38
Worldwide Wireless Networks, Inc.
Statement of Cash Flow
For the Eight Months Ending August 31, 1999
Current Month Year to Date
------------- ------------
Cash Flows from operating activities
Net Income <95,084.68> <618,484.98>
Adjustments to reconcile net
income to net cash provided
by operating activities
Accum. Depr - Furn & Fixtures 349.40 2,315.57
Accum. Depr. - Office Equip 1,080.45 6,869.99
Accum. Depr - Network Equip 5,331.70 25,120.51
Accum. Depr.-Leased Equipment 5,826.43 46,611.72
Accum Depr. DSL Equipment 1,697.17 2,729.67
Accum. Depr. - Co. Web Site 171.51 1,064.92
Accum. Depr. - Wireless P.S. 12,715.06 82,098.74
Accum. Depr. - Wireless Cust 4,687.65 26,887.45
Accounts Receivable <7,193.50> <159,565.93>
Allowance for Doubtful Accts 2,800.00 2,800.00
Other Receivables 0.00 <1,820.00>
Loan to Officer - Dennis 0.00 0.00
Loan to Officer - Jack 0.00 0.00
Loan to Officer - Sean 0.00 0.00
Inventory 99,009.63 <21,151.90>
Prepaid Expenses <2,600.00> <2,600.00>
Employee Advances <916.28> <497.00>
Notes Receivable-Current 0.00 0.00
Other Current Assets 0.00 <1,500.00>
Garnishments Payable 899.48 899.48
Accounts Payable 22,278.91 211,796.79
Accrued Interest 880.37 880.37
Accrued Expenses 0.00 0.00
Sales Tax Payable 1,393.06 4,996.77
Federal Payroll Taxes Payable 0.00 0.00
FUTA Tax Payable 0.00 0.00
State Payroll Taxes Payable 0.00 0.00
SUTA Tax Payable 0.00 0.00
Employee Taxes Payable 0.00 0.00
Customer Deposit <8,389.74> 0.00
Current Portion Long-Term Debt 0.00 0.00
Suspense - Clearing Account <5,553.89> <5,553.89>
------------- ------------
Total Adjustments 134,467.41 222,383.26
------------- ------------
Net Cash provided by Operations 39,382.73 <396,101.72>
------------- ------------
Cash Flows from investing activities
Used For
Prepaid Commission <1,500.00> <32,990.08>
Deferred Charges <2,941.00> <29,648.86>
Investment 0.00 0.00
Furniture and Fixtures <1,245.01> <23,253.94>
Equipment - Office <7,449.59> <64,826.86>
Equipment - Network <21,715.63> <299,328.51>
Equipment - Leased 0.00 0.00
DSL Equipment <7,976.00> <20,366.00>
Company Web Site 0.00 <6,174.23>
Equipment - Wireless Pop Sites <112,336.28> <458,781.59>
Equipment - Wireless Customer <39,161.47> <169,852.04>
Deposits 0.00 <13,675.45>
Notes Receivable- Noncurrent 0.00 0.00
------------- ------------
Net cash used in investing <194,324.98> <1,118,897.56>
------------- ------------
Cash Flows from financing activities
Proceeds From
BOA Credit Line 0.00 0.00
Unaudited - For Internal Use Only
<PAGE> 39
Worldwide Wireless Networks, Inc.
Statement of Cash Flow
For the Eight Months Ending August 31, 1999
Sanwa Bank Credit Line 0.00 0.00
Glendale Federal Credit Line 0.00 0.00
Deferred Revenue 12,096.00 143,250.50
Capital Lease Payable 0.00 0.00
Notes Payable-Noncurrent 0.00 0.00
Note Payable - AT 50,000.00 50,000.00
Note Payable - PH 250,000.00 250,000.00
Other Payables 0.00 0.00
Note Payable-Chausse-Noncurr 0.00 0.00
Note Payable-Yeung-Noncurrent 0.00 0.00
Common Stock 0.00 0.00
Beginning Balance Equity 0.00 0.00
Jack's Capital - Beg 0.00 0.00
Dennis Capital - Beg 0.00 0.00
Beginning Balance Equity 0.00 25,254.40
Investor's Capital - Beg 0.00 1,000,000.00
Add'l Paid -in-Capital 0.00 100,000.00
Draw - Dennis/Susan 0.00 12,922.14
Draw - Jack 0.00 48,763.50
Draw - Sean 0.00 8,890.00
Used For
BOA Credit Line <501.00> <1,503.00>
Sanwa Bank Credit Line <776.78> <4,127.29>
Glendale Federal Credit Line 0.00 0.00
Deferred Revenue <8,181.00> <52,841.00>
Capital Lease Payable <5,000.96> <42,458.30>
Notes Payable-Noncurrent 0.00 <16,300.00>
Note Payable - AT 0.00 0.00
Note Payable - PH 0.00 0.00
Other Payables 0.00 <65,760.23>
Note Payable-Chausse-Noncurr <500.00> <4,000.00>
Note Payable-Yeung-Noncurrent 0.00 <15,000.00>
Common Stock 0.00 0.00
Beginning Balance Equity 0.00 0.00
Jack's Capital - Beg 0.00 0.00
Dennis Capital - Beg 0.00 0.00
Beginning Balance Equity 0.00 <25,254.40>
Investor's Capital - Beg 0.00 0.00
Add'l Paid -in-Capital 0.00 0.00
Draw - Dennis/Susan 0.00 <12,922.14>
Draw - Jack 0.00 <48,763.50>
Draw - Sean 0.00 <8,890.00>
------------- ------------
Net cash used in financing 297,136.26 1,341,260.68
------------- ------------
Net increase <decrease> in cash 142,194.01 <173,738.60>
============= ============
Summary
Cash Balance at End of Period 183,220.06 183,220.06
Cash Balance at Beginning of P <30,267.07> 4,091.63
------------- ------------
Net Increase <Decrease> in Cash 152,952.99 187,311.69
============= ============
Unaudited- For internal Use Only
<PAGE> 40
PART III
ITEM 1: INDEX TO AND DESCRIPTION OF EXHIBITS
Exhibit
Number Description Location
2.1 Articles of Incorporation of Second Investors
Group, dated June 10, 1992 See attached
2.2 Certificate of Amendment to Articles of
Incorporation filed June 19, 1998 See attached
2.3 Certificate of Amendment to Articles of
Incorporation filed March 5, 1999 See attached
2.4 Articles of Merger filed April 9, 1999 See attached
2.5 Amended and Restated Bylaws of Worldwide Wireless See attached
6.1 Lease Agreement between Worldwide Wireless and
NL-Orange, LP dated March 30, 1999 See attached
6.2 Consultant Agreement between Worldwide Wireless
and Columbia Financial Group, dated June 1, 1999 See attached
6.3 Form of Employment Agreement See attached
6.4 Microwave radio status license call sign WP0T648
between Worldwide Wireless and the FCC, dated
July 7, 1999 See attached
6.5 Microwave radio status license call sign WP0T649
between Worldwide Wireless and the FCC, dated
July 7, 1999 See attached
6.6 Agreement between Bridge Technology, Inc. and
Worldwide Wireless, See attached
dated May 20, 1999.
6.7 Purchase Agreement between Adaptive Broadband
Corporation and Worldwide Wireless, dated
October 27, 1999 See attached
8.1 Agreement and Plan of Merger between Worldwide
Wireless and Pacific Link Internet, Inc., dated
March 31, 1999 See attached
22.1 Subsidiaries of the Registrant See attached
27.1 Financial Data Schedule See attached
________________________
<PAGE> 41
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
Worldwide Wireless has caused this registration statement to be signed on its
behalf by the undersigned, who is duly authorized.
Date November 3, 1999. Worldwide Wireless Networks, Inc.
By: /s/ Jack Tortorice
------------------
Jack Tortorice, CEO
By: /s/ Dennis Shen
---------------
Dennis Shen, President
<Date stamp for the Secretary of State for the State of Nevada dated June 10,
1992 appears here>
ARTICLES OF INCORPORATION
OF
SECOND INVESTORS GROUP, INC.
The undersigned, acting as incorporator, pursuant to the provisions of the
laws of the State of Nevada relating to private corporations, hereby adopts
the following Articles of Incorporation:
ARTICLE ONE. (NAME). The name of the corporation is:
SECOND INVESTORS GROUP, INC.
ARTICLE TWO. (LOCATION). The address of the corporation's registered office in
the State of Nevada is 5025 S. Eastern Avenue, #24, in the city of Las Vegas,
County of Clark, State of Nevada 89119. The initial agent for service of
process at that address is PACIFIC NATIONAL VENTURES, INC.
ARTICLE THREE. (PURPOSES). The purposes for which the corporation is
organized are to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America.
ARTICLE FOUR. (CAPITAL STOCK). The corporation shall have authority to issue
an aggregate of TWENTY-FIVE MILLION (25,000,000) shares, par value ONE MIL
(0.001) per share, for a total capitalization of $25,000.
The holders of shares of capital stock of the corporation shall not be
entitled to pre-emptive or preferential rights to subscribe to any unissued
stock of any other securities which the corporation may now or hereafter be
authorized to issue.
The corporation's capital stock may be issued and sold from time to time for
such consideration as may be fixed by the Board of Directors, provided that
the consideration so fixed is not less than par value.
The stockholders shall not posses cumulative voting rights at any shareholders
meetings called for the purpose of electing a Board of Directors.
ARTICLE FIVE. (DIRECTORS). The affairs of the corporation shall be governed
by a Board of Directors of not less than three (3) persons. The names and
addresses of the first Board of Directors are:
NAME ADDRESS
- ---- -------
Elliot R. Pearson 5025 S. Eastern Ave., #24
Las Vegas, NV 89119
Curt Jamison P.O. Box 71602
Reno, Nevada 89570
Steve Lopez 1536 La Jolla Avenue
Las Vegas, NV 89109
ARTICLE SIX. (ASSESSMENT OF STOCK). The capital stock of the corporation,
after the amount of the subscription price or par value has been paid or par
value has been paid in, shall not be subject to pay debts of the corporation,
and no paid up stock and stock issued as fully paid up shall ever be
assessable or assessed.
ARTICLE SEVEN. (INCORPORATOR). The name and address of the incorporator of
the corporation is as follows:
NAME ADDRESS
Elliot R. Pearson 5025 S. Eastern Ave., #24
Las Vegas, NV 89119
ARTICLE EIGHT. (PERIOD OF EXISTENCE). The period of existence of the
corporation shall be perpetual.
ARTICLE NINE. (BY-LAWS). The initial By-Laws of the corporation shall be
adopted by its Board of Directors. The power to alter, amend, or repeal the
By-Laws, or to adopt new By-Laws, shall be vested in the Board of Directors,
except as otherwise may be specifically provided in the By-Laws.
ARTICLE TEN. (STOCKHOLDERS' MEETINGS). Meetings of stockholders shall be held
at such place within or without the State of Nevada as may be provided by the
By-Laws of the corporation. Special meetings of the stockholders may be
called by the Board of Directors, or any member thereof, or by the record
holder or holders of at least ten percent (10%) of all shares be taken at a
meeting of the stockholders, except election of directors, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by stockholders having at least a majority of the voting
power.
ARTICLE ELEVEN. (CONTRACTS OF CORPORATION). No contract or other transaction
between the corporation and any other corporation, whether or not a majority
of the shares of the capital stock of such other corporation is owned by this
corporation, and no act of this corporation shall in any way be affected or
invalidated by the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors or officers or such
other corporation. Any Director of this corporation, individually, or any
firm of which such director may be a member, may be a part to, or may be
pecuniarily or otherwise interested in any contract or transaction of the
corporation; provided, however, that the fact that he or such firm is so
interested shall be disclosed or shall have been known to then Board of
Directors of this corporation, or a majority thereof; and any director of this
corporation, or who is so interested, may be counted in determining the
existence of a quorum at any meeting of the Board of Directors of this
corporation that shall authorize such contract or transaction, and may vote
thereat to authorize such contract or transaction, with like force and effect
as if he were not such director or officer of such other corporation or not so
interested.
IN WITNESS WHEREOF, the undersigned incorporator has hereunto fixed his
signature in Las Vegas, Nevada this 8th day of June, 1992.
By: /s/ Elliot R. Pearson
---------------------
Elliot R. Pearson
STATE OF NEVADA )
: ss.
CLARK COUNTY )
On this 8th day of June, 1992 before me, the undersigned, a Notary Public,
personally appeared Elliot R. Pearson, known to me to be the person described
in and the executed the foregoing instrument, and who acknowledged to me that
he executed the same freely and voluntarily and for the uses and purposes
therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
the day and year in this certificate first above written.
/s/ Richard S. Nicholas
- -----------------------
NOTARY PUBLIC
RESIDING IN CLARK COUNTY
MY COMMISSION EXPIRES:
December 2, 1995
<Notary public stamp of Richard S. Nicholas appears here>
<Date stamp for the Secretary of State for the State of Nevada dated June 19,
1998 appears here>
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
SECOND INVESTORS GROUP, INC.
We the undersigned as President and Secretary of Second Investors Group,
Inc. do hereby certify:
That the Board of Directors of said Corporation at a Sencond Investors
Group, Inc. meeting duly convened on the 17th day of June, 1998 adopted a
Resolution to amend the original Articles as follows:
A. Delete Article I in its entirety and substitute in its place the
following:
Article One. The name of the Corporation is Progressive Environmental
Recovery Corporation.
Said amendment has been consented to and approved by the owners of
majority of the duly issued and outstanding shares of common stock which
represent a majority of the sole class of common stock outstanding and
entitled to vote thereon. The change is effective immediately upon the filing
of this Certificate.
/s/ Anita Patterson
- -------------------
ANITA PATTERSON
/s/ John W. Peters
- ------------------
JOHN W. PETERS
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On this 18th day of June, 1998, personally appeared before me Anita
Patterson and John W. Peters, personally known to me or provided to me on the
basis of satisfactory evidence to be the persons whose names are signed on the
preceding document, and acknowledged to me that they signed it voluntarily for
its stated purpose.
/s/ M. Jeanne Ball
- ------------------
NOTARY PUBLIC
<Notary public stamp of M. Jeanne Ball appears here>
<Date stamp for the Secretary of State for the State of Nevada dated March 5,
1999 appears here>
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
PROGRESSIVE ENVIRONMENTAL RECOVERY CORPORATION
We the undersigned as President and Secretary of Progressive
Environmental Recovery Corporation do hereby certify:
That the Board of Directors of said Corporation at a Progressive
Environmental Corporation meeting duly convened on the 18th day of January,
1999 adopted a Resolution to amend the original Articles as follows:
A. Delete Article I in its entirety and substitute in its place the
following:
Article One. The name of the Corporation is Worldwide Wireless Networks,
Inc.
The above Amendment to the Articles of Incorporation was adopted by the
holders of a majority, 580,000 common shares of the 999,997 outstanding common
shares of the Corporation on January 18th, 1999.
Said amendment has been consented to and approved by the owners of
majority of the duly issued and outstanding shares of common stock which
represent a majority of the sole class of common stock outstanding and
entitled to vote thereon. The change is effective immediately upon the filing
of this Certificate.
/s/ Anita Patterson
- -------------------
ANITA PATTERSON
/s/ John W. Peters
- ------------------
JOHN W. PETERS
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On this 29th day of January, 1999, personally appeared before me Anita
Patterson and John W. Peters, personally known to me or provided to me on the
basis of satisfactory evidence to be the persons whose names are signed on the
preceding document, and acknowledged to me that they signed it voluntarily for
its stated purpose.
/s/ M. Jeanne Ball
- ------------------
NOTARY PUBLIC
<Notary public stamp of M. Jeanne Ball appears here>
<Date stamp for the Secretary of State for the State of Nevada dated April 9,
1999 appears here>
ARTICLES OF MERGER FOR
WORLDWIDE WIRELESS NETWORKS, INC.,
A NEVADA CORPORATION
Pursuant to the provisions of Section 92A.200 of the Nevada Revised
Statutes, Worldwide Wireless Networks, Inc., a Nevada corporation (the
"Corporation"), hereby adopts and files the following Articles of Merger as
the surviving corporation to the merger of Pacific Link Internet, Inc., a
California corporation ("Pacific"), with and into the Corporation:
FIRST: The name and place of incorporation of each corporation which is
a party to this merger is as follows:
Name Place of Incorporation
---- ----------------------
Worldwide Wireless Networks, Inc. Nevada
Pacific Link Internet, Inc. California
SECOND: The Agreement and Plan of Merger (the "Plan") governing the
merger between the Corporation and Pacific, has been adopted by the Board of
Directors of the Corporation and Pacific.
THIRD: The approval of the shareholders of the Corporation and Pacific
was required to effectuate the merger. The number of shares of stock
outstanding in each of the corporations (and the number of votes entitled to
be cast) as of the date of the adoption of the Plan was as follows:
Entity Type of Shares Number of Shares Outstanding
- ------ -------------- ----------------------------
Worldwide Wireless
Networks, Inc. Common 999,997
Pacific Link Internet, Inc. Common 500,000
The number of shares of stock of each corporation which voted for and
against the Plan was as follows:
Entity Type of Shares For Against
Worldwide Wireless Networks, Inc. Common 580,000 0
Pacific Link Internet, Inc. Common 500,000 0
FOURTH: The number of votes cast for the Plan by each voting group entitled
to vote was sufficient for approval of the merger by each such voting group.
FIFTH: Following the merger Article IV to the Articles of Incorporation of
the surviving corporation shall be amended as follows:
Delete Article IV in its entirety and substitute in its place the following:
ARTICLE IV
The amount of the total authorized capital stock of the Corporation is
50,000,000 shares of common stock, par value $.001 per share. Each share of
common stock shall have one (1) vote. Such stock may be issued from time to
time without any action by the stockholders for such consideration as may be
fixed from time to time by the Board of Directors, and shares so issued, the
full consideration for which has been paid or delivered, shall be deemed the
full paid up stock, and the holder of such shares shall not be liable for any
further payment thereof. Said stock shall not be subject to assessment to pay
the debts of the Corporation, and no paid-up stock and no stock issued as
fully paid, shall ever be assessed or assessable by the Corporation.
The Corporation is authorized to issue 50,000,000 shares of common stock,
par value $.001 per share.
SIXTH: The complete executed Plan is on file at the registered office or
other place of business of the Corporation.
SEVENTH: A copy of the Plan will be furnished by the Corporation, on
request and without cost, to any shareholder of either corporation which is a
party to the merger.
EIGHTH: The merger will be effective upon the filing of the Articles of
Merger.
DATED this 9th day of April, 1999.
WORLDWIDE WIRELESS NETWORKS, INC.,
a Nevada corporation
By: /s/ Anita Patterson
-------------------
Anita Patterson, President
By: /s/ John Peters
---------------
John Peters, Secretary/Treasurer
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On the 9th day of April, 1999, personally appeared before me Anita
Patterson and John Peters personally known to me or proved to me on the basis
of satisfactory evidence, and who, being by me duly sworn, did say that they
are the President and Secretary/Treasurer of Worldwide Wireless Networks,
Inc., and that said document was signed by them on behalf of said corporation
by authority of its bylaws, and said Anita Patterson and John Peters
acknowledged to me that said corporation executed the same.
/s/ M. Jeanne Ball
- ------------------
NOTARY PUBLIC
<Notary public stamp of M. Jeanne Ball appears here>
AMENDED AND RESTATED
BYLAWS
OF
WORLDWIDE WIRELESS NETWORKS, INC.
ARTICLE 1. OFFICES
1.1 Business Office. The principal office of the corporation shall be
located at any place either within or outside the State of Nevada as
designated in the corporation's most recent document on file with the Nevada
Secretary of State, Division of Corporations. The corporation may have such
other offices, either within or without the State of Nevada as the board of
directors may designate or as the business of the corporation may require from
time to time.
1.2 Registered Office. The registered office of the corporation shall be
located within the State of Nevada and may be, but need not be, identical with
the principal office. The address of the registered office may be changed
from time to time.
ARTICLE 2. SHAREHOLDERS
2.1 Annual Shareholder Meeting. The annual meeting of the shareholders shall
be held on the 1st day of May, at a date and time to be specified by the Board
of Directors, for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday in the State of Nevada, such meeting
shall be held on the next succeeding business day.
2.2 Special Shareholder Meeting. Special meetings of the shareholders, for
any purpose or purposes described in the meeting notice, may be called by the
president, or by the board of directors, and shall be called by the president
at the request of the holders of not less than one-fourth of all outstanding
votes of the corporation entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may designate any
place, either within or without the State of Nevada, as the place of meeting
for any annual or any special meeting of the shareholders, unless by written
consent, which may be in the form of waivers of notice or otherwise, all
shareholders entitled to vote at the meeting designate a different place,
either within or without the State of Nevada, as the place for the holding of
such meeting.
2.4 Notice of Shareholder Meeting. Written notice stating the date, time,
and place of any annual or special shareholder meeting shall be delivered not
less than 10 nor more than 60 days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the board of
directors, or other persons calling the meeting, to each shareholder of record
entitled to vote at such meeting and to any other shareholder entitled by the
Nevada Revised Statutes (the "Statutes") or the articles of incorporation to
receive notice of the meeting. Notice shall be deemed to be effective at the
earlier of: (1) when deposited in the United States mail, addressed to the
shareholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid; (2) on the date shown on the return
receipt if sent by registered or certified mail, return receipt requested, and
the receipt is signed by or on behalf of the addressee; (3) when received; or
(4) 3 days after deposit in the United States mail, if mailed postpaid and
correctly addressed to an address other than that shown in the corporation's
current record of shareholders.
If any shareholder meeting is adjourned to a different date, time or place,
notice need not be given of the new date, time and place, if the new date,
time and place is announced at the meeting before adjournment. But if the
adjournment is for more than 30 days or if a new record date for the adjourned
meeting is or must be fixed, then notice must be given pursuant to the
requirements of the previous paragraph, to those persons who are shareholders
as of the new record date.
2.5 Waiver of Notice. A shareholder may waive any notice required by the
Statutes, the articles of incorporation, or these bylaws, by a writing signed
by the shareholder entitled to the notice, which is delivered to the
corporation (either before or after the date and time stated in the notice)
for inclusion in the minutes or filing with the corporate records.
A shareholder's attendance at a meeting:
(a) waives objection to lack of notice or defective notice of the meeting,
unless the shareholder at the beginning of the meeting objects to holding the
meeting or transacting business at the meeting because of lack of notice or
effective notice; and
(b) waives objection to consideration of a particular matter at the meeting
that is not within the purpose or purposes described in the meeting notice,
unless the shareholder objects to considering the matter when it is presented.
2.6 Fixing of Record Date. For the purpose of determining shareholders of
any voting group entitled to notice of or to vote at any meeting of
shareholders, or shareholders entitled to receive payment of any distribution,
or in order to make a determination of shareholders for any other proper
purpose, the board of directors may fix in advance a date as the record date.
Such record date shall not be more than 70 days prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. If no record date is so fixed by the board for the determination of
shareholders entitled to notice of, or to vote at a meeting of shareholders,
the record date for determination of such shareholders shall be at the close
of business on the day the first notice is delivered to shareholders. If no
record date is fixed by the board for the determination of shareholders
entitled to receive a distribution, the record date shall be the date the
board authorizes the distribution. With respect to actions taken in writing
without a meeting, the record date shall be the date the first shareholder
signs the consent.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination
shall apply to any adjournment thereof unless the board of directors fixes a
new record date which it must do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
2.7 Shareholder List. After fixing a record date for a shareholder meeting,
the corporation shall prepare a list of the names of its shareholders entitled
to be given notice of the meeting. The shareholder list must be available for
inspection by any shareholder, beginning on the earlier of 10 days before the
meeting for which the list was prepared or 2 business days after notice of the
meeting is given for which the list was prepared and continuing through the
meeting, and any adjournment thereof. The list shall be available at the
corporation's principal office or at a place identified in the meeting notice
in the city where the meeting is to be held.
2.8 Shareholder Quorum and Voting Requirements.
2.8.1 Quorum. Except as otherwise required by the Statutes or the articles
of incorporation, a majority of the outstanding shares of the corporation,
represented by person or by proxy, shall constitute a quorum at each meeting
of the shareholders. If a quorum exists, action on a matter, other than the
election of directors, is approved if the votes cast favoring the action
exceed the votes cast opposing the action, unless the articles of
incorporation or the Statutes require a greater number of affirmative votes.
2.8.2 Voting of Shares. Unless otherwise provided in the articles of
incorporation or these bylaws, each outstanding share, regardless of class, is
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders.
2.9 Quorum and Voting requirements of Voting Groups. If the articles of
incorporation or the Statutes provide for voting by a single voting group on a
matter, action on that matter is taken when voted upon by that voting group.
Once a share is represented for any purpose at a meeting, it is deemed present
for quorum purposes for the remainder of the meeting and for any adjournment
of that meeting unless a new record date is or must be set for that adjourned
meeting.
Shares entitled to vote as a separate voting group may take action on a matter
at a meeting only if a quorum of those shares exists with respect to that
matter. Unless the articles of incorporation or the Statutes provide
otherwise, a majority of the votes entitled to be cast on the matter by the
voting group constitutes a quorum of that voting group for action on that
matter.
If the articles of incorporation or the Statutes provide for voting by two or
more voting groups on a matter, action on that matter is taken only when voted
upon by each of those voting groups counted separately. Action may be taken
by one voting group on a matter even though no action is taken by another
voting group entitled to vote on the matter.
If a quorum exists, action on a matter, other than the election of directors,
by a voting group is approved if the votes cast within the voting group
favoring the action exceed the votes cast opposing the action, unless the
articles of incorporation or the Statutes require a greater number of
affirmative votes.
2.10 Greater Quorum or Voting Requirements. The articles of incorporation
may provide for a greater quorum or voting requirement for shareholders, or
voting groups of shareholders, than is provided for by these bylaws. An
amendment to the articles of incorporation that adds, changes, or deletes a
greater quorum or voting requirement for shareholders must meet the same
quorum requirement and be adopted by the same vote and voting groups required
to take action under the quorum and voting requirement then in effect or
proposed to be adopted, whichever is greater.
2.11 Proxies. At all meetings of shareholders, a shareholder may vote in
person or by proxy which is executed in writing by the shareholder or which is
executed by his duly authorized attorney-in-fact. Such proxy shall be filed
with the Secretary of the corporation or other person authorized to tabulate
votes before or at the time of the meeting. No proxy shall be valid after 11
months from the date of its execution unless otherwise provided in the proxy.
All proxies are revocable unless they meet specific requirements of
irrevocability set forth in the Statutes. The death or incapacity of a voter
does not invalidate a proxy unless the corporation is put on notice. A
transferee for value who receives shares subject to an irrevocable proxy, can
revoke the proxy if he had no notice of the proxy.
2.12 Corporation's Acceptance of Votes.
2.12.1 If the name signed on a vote, consent, waiver, proxy appointment, or
proxy appointment revocation corresponds to the name of a shareholder, the
corporation, if acting in good faith, is entitled to accept the vote, consent,
waiver, proxy appointment, or proxy appointment revocation and give it effect
as the act of the shareholder.
2.12.2 If the name signed on a vote, consent, waiver, proxy appointment, or
proxy appointment revocation does not correspond to the name of a shareholder,
the corporation, if acting in good faith, is nevertheless entitled to accept
the vote, consent, waiver, proxy appointment, or proxy appointment revocation
and give it effect as the act of the shareholder if:
(a) the shareholder is an entity as defined in the Statutes and the name
signed purports to be that of an officer or agent of the entity;
(b) the name signed purports to be that of an administrator, executor,
guardian, or conservator representing the shareholder and, if the corporation
requests, evidence of fiduciary status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, proxy appointment or
proxy appointment revocation;
(c) the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of
this status acceptable to the corporation has been presented with respect to
the vote, consent, waiver, proxy appointment, or proxy appointment revocation;
or
(d) the name signed purports to be that of a pledgee, beneficial owner, or
attorney-in-fact of the shareholder and, if the corporation requests, evidence
acceptable to the corporation of the signatory's authority to sign for the
shareholder has been presented with respect to the vote, consent, waiver,
proxy appointment or proxy appointment revocation; or
(e) two or more persons are the shareholder as co-tenants or fiduciaries and
the name signed purports to be the name of at least one of the co-owners and
the person signing appears to be acting on behalf of all co-tenants or
fiduciaries.
2.12.3 If shares are registered in the names of two or more persons, whether
fiduciaries, members of a partnership, co-tenants, husband and wife as
community property, voting trustees, persons entitled to vote under a
shareholder voting agreement or otherwise, or if two or more persons
(including proxy holders) have the same fiduciary relationship respecting the
same shares, unless the secretary of the corporation or other officer or agent
entitled to tabulate votes is given written notice to the contrary and is
furnished with a copy of the instrument or order appointing them or creating
the relationship wherein it is so provided, their acts with respect to voting
shall have the following effect:
(a) if only one votes, such act binds all;
(b) if more than one votes, the act of the majority so voting bind all;
(c) if more than one votes, but the vote is evenly split on any particular
matter, each fraction may vote the securities in question proportionately.
If the instrument so filed or the registration of the shares shows that any
tenancy is held in unequal interests, a majority or even split for the purpose
of this Section shall be a majority or even split in interest.
2.12.4 The corporation is entitled to reject a vote, consent, waiver, proxy
appointment or proxy appointment revocation if the secretary or other officer
or agent authorized to tabulate votes, acting in good faith, has reasonable
basis for doubt about the validity of the signature on it or about the
signatory's authority to sign for the shareholder.
2.12.5 The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, proxy appointment or proxy appointment revocation in
good faith and in accordance with the standards of this Section are not liable
in damages to the shareholder for the consequences of the acceptance or
rejection.
2.12.6 Corporate action based on the acceptance or rejection of a vote,
consent, waiver, proxy appointment or proxy appointment revocation under this
Section is valid unless a court of competent jurisdiction determines
otherwise.
2.13 Action by Shareholders Without a Meeting.
2.13.1 Written Consent. Any action required or permitted to be taken at a
meeting of the shareholders may be taken without a meeting and without prior
notice if one or more consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shareholders entitled to vote with respect to
the subject matter thereof were present and voted. Action taken under this
Section has the same effect as action taken at a duly called and convened
meeting of shareholders and may be described as such in any document.
2.13.2 Post-Consent Notice. Unless the written consents of all shareholders
entitled to vote have been obtained, notice of any shareholder approval
without a meeting shall be given at least ten days before the consummation of
the action authorized by such approval to (i) those shareholders entitled to
vote who did not consent in writing, and (ii) those shareholders not entitled
to vote. Any such notice must be accompanied by the same material that is
required under the Statutes to be sent in a notice of meeting at which the
proposed action would have been submitted to the shareholders for action.
2.13.3 Effective Date and Revocation of Consents. No action taken pursuant
to this Section shall be effective unless all written consents necessary to
support the action are received by the corporation within a sixty-day period
and not revoked. Such action is effective as of the date the last written
consent is received necessary to effect the action, unless all of the written
consents specify an earlier or later date as the effective date of the action.
Any shareholder giving a written consent pursuant to this Section may revoke
the consent by a signed writing describing the action and stating that the
consent is revoked, provided that such writing is received by the corporation
prior to the effective date of the action.
2.13.4 Unanimous Consent for Election of Directors. Notwithstanding
subsection (a), directors may not be elected by written consent unless such
consent is unanimous by all shares entitled to vote for the election of
directors.
2.14 Voting for Directors. Unless otherwise provided in the articles of
incorporation, every shareholder entitled to vote for the election of
directors has the right to cast, in person or by proxy, all of the votes to
which the shareholder's shares are entitled for as many persons as there are
directors to be elected and for whom election such shareholder has the right
to vote. Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present.
ARTICLE 3. BOARD OF DIRECTORS
3.1 General Powers. Unless the articles of incorporation have dispensed with
or limited the authority of the board of directors by describing who will
perform some or all of the duties of a board of directors, all corporate
powers shall be exercised by or under the authority, and the business and
affairs of the corporation shall be managed under the direction, of the board
of directors.
3.2 Number, Tenure and Qualification of Directions. The authorized number of
directors shall be three (3); provided, however, that if the corporation has
less than three shareholders entitled to vote for the election of directors,
the board of directors may consist of a number of individuals equal to or
greater than the number of those shareholders. The current number of
directors shall be within the limit specified above, as determined (or as
amended form time to time) by a resolution adopted by either the shareholders
or the directors. Each director shall hold office until the next annual
meeting of shareholders or until the director's earlier death, resignation, or
removal. However, if his term expires, he shall continue to serve until his
successor shall have been elected and qualified, or until there is a decrease
in the number of directors. Directors do not need to be residents of Nevada
or shareholders of the corporation.
3.3 Regular Meetings of the Board of Directors. A regular meeting of the
board of directors shall be held without other notice than this bylaw
immediately after, and at the same place as, the annual meeting of
shareholders, for the purpose of appointing officers and transacting such
other business as may come before the meeting. The board of directors may
provide, by resolution, the time and place for the holding of additional
regular meetings without other notice than such resolution.
3.4 Special Meetings of the Board of Directors. Special meetings of the
board of directors may be called by or at the request of the president or any
director. The person authorized to call special meetings of the board of
directors may fix any place as the place for holding any special meeting of
the board of directors.
3.5 Notice of, and Waiver of Notice for, Special Director Meeting. Unless
the articles of incorporation provide for a longer or shorter period, notice
of the date, time, and place of any special director meeting shall be given at
least two days previously thereto either orally or in writing. Any director
may waive notice of any meeting. Except as provided in the next sentence, the
waiver must be in writing and signed by the director entitled to the notice.
The attendance of a director at a meeting shall constitute a waiver of notice
of such meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business and at the beginning
of the meeting (or promptly upon his arrival) objects to holding the meeting
or transacting business at the meeting, and does not thereafter vote for or
assent to action taken at the meeting. Unless required by the articles of
incorporation, neither the business to be transacted at, nor the purpose of,
any special meeting of the board of directors need be specified in the notice
or waiver of notice of such meeting.
3.6 Director Quorum and Voting.
3.6.1 Quorum. A majority of the number of directors prescribed by resolution
shall constitute a quorum for the transaction of business at any meeting of
the board of directors unless the articles of incorporation require a greater
percentage.
Unless the articles of incorporation provide otherwise, any or all directors
may participate in a regular or special meeting by, or conduct the meeting
through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. A
director participating in a meeting by this means is deemed to be present in
person at the meeting.
A director who is present at a meeting of the board of directors or a
committee of the board of directors when corporate action is taken is deemed
to have assented to the action taken unless: (1) the director objects at the
beginning of the meeting (or promptly upon his arrival) to holding or
transacting business at the meeting and does not thereafter vote for or assent
to any action taken at the meeting; and (2) the director contemporaneously
requests his dissent or abstention as to any specific action be entered in the
minutes of the meeting; or (3) the director causes written notice of his
dissent or abstention as to any specific action be received by the presiding
officer of the meeting before its adjournment or to the corporation
immediately after adjournment of the meeting. The right of dissent or
abstention is not available to a director who votes in favor of the action
taken.
3.7 Director Action Without a Meeting. Any action required or permitted to
be taken by the board of directors at a meeting may be taken without a meeting
if all the directors consent to such action in writing. Action taken by
consent is effective when the last director signs the consent, unless, prior
to such time, any director has revoked a consent by a signed writing received
by the corporation, or unless the consent specifies a different effective
date. A signed consent has the effect of a meeting vote and may be described
as such in any document.
3.8 Resignation of Directors. A director may resign at any time by giving a
written notice of resignation to the corporation. Such resignation is
effective when the notice is received by the corporation, unless the notice
specifies a later effective date.
3.9 Removal of Directors. The shareholders may remove one or more directors
at a meeting called for that purpose if notice has been given that a purpose
of the meeting is such removal. The removal may be with or without cause
unless the articles of incorporation provide that directors may only be
removed with cause. If a director is elected by a voting group of
shareholders, only the shareholders of that voting group may participate in
the vote to remove him. A director may be removed only if the number of votes
cast to remove him exceeds the number of votes cast not to remove him.
3.10 Board of Director Vacancies. Unless the articles of incorporation
provide otherwise, if a vacancy occurs on the board of directors, including a
vacancy resulting from an increase in the number of directors, the
shareholders may fill the vacancy. During such time that the shareholders
fail or are unable to fill such vacancies then and until the shareholders act:
(a) the board of directors may fill the vacancy; or
(b) if the board of directors remaining in office constitute fewer than a
quorum of the board, they may fill the vacancy by the affirmative vote of a
majority of all the directors remaining in office.
If the vacant office was held by a director elected by a voting group of
shareholders:
(a) if there are one or more directors elected by the same voting group, only
such directors are entitled to vote to fill the vacancy if it is filled by the
directors; and
(b) only the holders of shares of that voting group are entitled to vote to
fill the vacancy if it is filled by the shareholders.
A vacancy that will occur at a specific later date (by reason of a resignation
effective at a later date) may be filled before the vacancy occurs but the new
director may not take office until the vacancy occurs.
3.11 Director Compensation. By resolution of the board of directors, each
director may be paid his expenses, if any, of attendance at each meeting of
the board of directors and may be paid a stated salary as director or a fixed
sum for attendance at each meeting of the board of directors or both. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
3.12 Director Committees.
3.12.1 Creation of Committees. Unless the article sof incorporation provide
otherwise, the board of directors may create one or more committees and
appoint members of the board of directors to serve on them. Each committee
must have one or more members, who shall serve at the pleasure of the board of
directors.
3.12.2 Selection of Members. The creation of a committee and appointment of
members to it must be approved by the greater of (1) a majority of all the
directors in office when the action is taken or (2) the number of directors
required by the articles of incorporation to take such action.
3.12.3 Required Procedures. Those Sections of this Article 3 which govern
meetings, actions without meetings, notice and waiver of notice, quorum and
voting requirements of the board of directors, apply to committees and their
members.
3.12.4 Authority. Unless limited by the article sof incorporation, each
committee may exercise those aspects of the authority of the board of
directors which the board of directors confers upon such committee in the
resolution creating the committee. Provided, however, a committee may not:
(a) authorize distributions;
(b) approve or propose to shareholders action that the Statutes require be
approved by shareholders;
(c) fill vacancies on the board of directors or on any of its committees;
(d) amend the articles of incorporation pursuant to the authority of
directors to do so;
(e) adopt, amend or repeal bylaws;
(f) approve a plan of merger not requiring shareholder approval;
(g) authorize or approve reacquisition of shares, except according to a
formula or method prescribed by the board of directors; or
(h) authorize or approve the issuance or sale or contract for sale of shares
or determine the designation and relative rights, preference,s and limitations
of a class or series of shares, except that the board of directors may
authorize a committee (or an officer) to do so within limits specifically
prescribed by the board of directors.
ARTICLE 4. OFFICERS
4.1 Number of Officers. The officers of the corporation shall be a
president, a secretary and a treasurer, each of whom shall be appointed by the
board of directors. Such other officers and assistant officers as may be
deemed necessary, including any vice presidents, may also be appointed by the
board of directors. If specifically authorized by the board of directors, an
officer may appoint one or more officers or assistant officers. The same
individual may simultaneously hold more than one office in the corporation.
4.2 Appointment and Term of Office. The officers of the corporation shall be
appointed by the board of directors for a term as determined by the board of
directors. If no term is specified, they shall hold office until the first
meeting of the directors held after the next annual meeting of shareholders.
If the appointment of officers shall not be made at such meeting, such
appointment shall be made as soon thereafter as is convenient. Each officer
shall hold office until his successor shall have been duly appointed and shall
have qualified until his death, or until he shall resign or is removed.
The designation of a specified term does not grant to the officer any contract
rights, and the board may remove the officer at any time prior to the
termination of such term.
4.3 Removal of Officers. Any officer or agent may be removed by the board of
directors at any time, with or without cause. Such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
Appointment of an officer or agent shall not of itself create contract rights.
4.4 Resignation of Officers. Any officer may resign at any time, subject to
any rights or obligations under any existing contracts between the officers
and the corporation, by giving notice to the president or board of directors.
An officer's resignation shall take effect at the time specified therein, and
the acceptance of such resignation shall not be necessary to make it
effective.
4.5 President. Unless the board of directors has designated the chairman of
the board as chief executive officer, the president shall be the chief
executive officer of the corporation and, subject to the control of the board
of directors, shall in general supervise and control all of the business and
affairs of the corporation. Unless there is a chairman of the board, the
president shall, when present, preside at all meetings of the shareholders and
of the board of directors. The president may sign, with the secretary or any
other proper officer of the corporation thereunder authorized by the board of
directors, certificates for shares of the corporation and deeds, mortgages,
bonds, contracts, or other instruments which the board of directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the board f directors or by these
bylaws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the board of directors from time to time.
4.6 Vice Presidents. If appointed, in the absence of the president or in the
event of his death, inability or refusal to act, the vice president (or in the
event there be more than one vice president, the vice presidents in the order
designate at the time of their election, or in the absence of any designation,
then in the order of their appointment) shall perform the duties of the
president, and when so acting, shall have all the powers of, and be subject
to, all the restrictions upon the president.
4.7 Secretary. The secretary shall: (a) keep the minutes of the proceedings
of the shareholders, the board of directors, and any committees of the board
in one or more books provided for that purpose; (b) see that all notices are
duly given in accordance with the provisions of these bylaws or as required by
law; (c) be custodian of the corporate records; (d) when requested or
required, authenticate any records of the corporation; (e) keep a register of
the post office address of each shareholder which shall be furnished to the
secretary by such shareholder; (f) sign with the president, or a vice
president, certificates for shares of the corporation, the issuance of which
shall have been authorized by resolution of the board of directors; (g) have
general charge of the stock transfer books of the corporation; and (h) in
general perform all duties incident to the office of secretary and such other
duties as from time to time may be assigned by the president or by the board
of directors. Assistant secretaries, if any, shall have the same duties and
powers, subject to the supervision of the secretary.
4.8 Treasurer. The treasurer shall: (a) have charge and custody of and be
responsible for all funds and securities of the corporation; (b) receive and
give receipts for monies due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
bank, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
by the president or by the board of directors. If required by the board of
directors, the treasurer shall give a bond for the faithful discharge of his
or her duties in such sum and with such surety or sureties as the board of
directors shall determine. Assistant treasurers, if any, shall have the same
powers and duties, subject to the supervision of the treasurer.
4.9 Salaries. The salaries of the officers shall be fixed from time to time
by the board of directors.
ARTICLE 5. INDEMNIFICATION OF DIRECTORS,
OFFICERS, AGENTS, AND EMPLOYEES
5.1 Indemnification of Directors. Unless otherwise provided in the articles
of incorporation, the corporation shall indemnify any individual made a party
to a proceeding because the individual is or was a director of the
corporation, against liability incurred in the proceeding, but only if such
indemnification is both (i) determined permissible and (ii) authorized, as
such are defined in subsection (a) of this Section 5.1.
5.1.1 Determination of Authorization. The corporation shall not indemnify a
director under this Section unless:
(a) a determination has been made in accordance with the procedures set forth
in the Statutes that the director met the standard of conduct set forth in
subsection (b) below, and
(b) payment has been authorized in accordance with the procedures set forth
in the Statutes based on a conclusion that the expenses are reasonable, the
corporation has the financial ability to make the payment, and the financial
resources of the corporation should be devoted to this use rather than some
other use by the corporation.
5.1.2 Standard of Conduct. The individual shall demonstrate that:
(a) he or she conducted himself in good faith; and
(b) he or she reasonably believed:
(i) in the case of conduct in his official capacity with the
corporation, that his conduct was in its best interests;
(ii) in all other cases, that his conduct was at least not opposed to
its best interests; and
(iii) in the case of any criminal proceeding, he or she had no
reasonable cause to believe his conduct was unlawful.
5.1.3 Indemnification in Derivative Actions Limited. Indemnification
permitted under this Section in connection with a proceeding by or in the
right of the corporation is limited to reasonable expenses incurred in
connection with the proceeding.
5.1.4 Limitation on Indemnification. The corporation shall not indemnify a
director under this Section of Article 5:
(a) in connection with a proceeding by or in the right of the corporation in
which the director was adjudged liable to the corporation; or
(b) in connection with any other proceeding charging improper personal
benefit to the director, whether or not involving action in his or her
official capacity, in which he or she was adjudged liable on the basis that
personal benefit was improperly received by the director.
5.2 Advance of Expenses for Directors. If a determination is made following
the procedures of the Statutes, that the director has met the following
requirements, and if an authorization of payment is made following the
procedures and standards set forth in the Statutes, then unless otherwise
provided in the articles of incorporation, the corporation shall pay for or
reimburse the reasonable expenses incurred by a director who is a party to a
proceeding in advance of final disposition of the proceeding, if:
(a) the director furnishes the corporation a written affirmation of his good
faith belief that he has met the standard of conduct described in this
section;
(b) the director furnishes the corporation a written undertaking, executed
personally or on his behalf, to repay the advance if it is ultimately
determined that he did not meet the standard of conduct;
(c) a determination is made that the facts then known to those making the
determination would not preclude indemnification under this Section or the
Statutes.
5.3 Indemnification of Officers, Agents and Employees Who Are Not Directors.
Unless otherwise provided in the articles of incorporation, the board of
directors may indemnify and advance expenses to any officer, employee, or
agent of the corporation, who is not a director of the corporation, to the
same extent as to a director, or to any greater extent consistent with public
policy, as determined by the general or specific actions of the board of
directors.
5.4 Insurance. By action of the board of directors, notwithstanding any
interest of the directors in such action, the corporation may purchase and
maintain insurance on behalf of a person who is or was a director, officer,
employee, fiduciary or agent of the corporation, against any liability
asserted against or incurred by such person in that capacity or arising from
such person's status as a director, officer, employee, fiduciary, or agent,
whether or not the corporation would have the power to indemnify such person
under the applicable provisions of the Statutes.
ARTICLE 6. STOCK
6.1 Issuance of Shares. The issuance or sale by the corporation of any
shares of its authorized capital stock of any class, including treasury
shares, shall be made only upon authorization by the board of directors,
unless otherwise provided by statute. The board of directors may authorize
the issuance of shares for consideration consisting of any tangible or
intangible property or benefit to the corporation, including cash, promissory
notes, services performed, contracts or arrangements for services to be
performed, or other securities of the corporation. Shares shall be issued for
such consideration expressed in dollars as shall be fixed from time to time by
the board of directors.
6.2 Certificates for Shares.
6.2.1 Content. Certificates representing shares of the corporation shall at
minimum, state on their face the name of the issuing corporation and that it
is formed under the laws of the State of Nevada; the name of the person to
whom issued; and the number and class of shares and the designation of the
series, if any, the certificate represents; and be in such form as determined
by the board of directors. Such certificates shall be signed (either manually
or by facsimile) by the president or a vice president and by the secretary or
an assistant secretary and may be sealed with a corporate seal or a facsimile
thereof. Each certificate for shares shall be consecutively numbered or
otherwise identified.
6.2.2 Legend as to Class or Series. If the corporation is authorized to
issue different classes of shares or different series within a class, the
designations, relative rights, preferences and limitations applicable to each
class and the variations in rights, preferences and limitations determined for
each series (and the authority of the board of directors to determine
variations for future series) must be summarized on the front or back of each
certificate. Alternatively, each certificate may state conspicuously on its
front or back that the corporation will furnish the shareholder this
information on request in writing and without charge.
6.2.3 Shareholder List. The name and address of the person to whom the
shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the corporation.
6.2.4 Transferring Shares. All certificates surrendered to the corporation
for transfer shall be canceled and no new certificate shall be issued until
the former certificate for a like number of shares shall have been surrendered
and canceled, except that in cash of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.3 Shares Without Certificates.
6.3.1 Issuing Shares Without Certificates. Unless the articles of
incorporation provide otherwise, the board of directors may authorize the
issue of some or all the shares of any or all of its classes or series without
certificates. The authorization does not affect shares already represented by
certificates until they are surrendered to the corporation.
6.3.2 Information Statement Required. Within a reasonable time after the
issue or transfer of shares without certificates, the corporation shall send
the shareholder a written statement containing, at a minimum, the information
required by the Statutes.
6.4 Registration of the Transfer of Shares. Registration of the transfer of
shares of the corporation shall be made only on the stock transfer books of
the corporation. In order to register a transfer, the record owner shall
surrender the shares to the corporation for cancellation, properly endorsed by
the appropriate person or persons with reasonable assurances that the
endorsements are genuine and effective. Unless the corporation has
established a procedure by which a beneficial owner of shares held by a
nominee is to be recognized by the corporation as the owner, the person in
whose name shares stand in the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
6.5 Restrictions on Transfer or Registration of Shares. The board of
directors or shareholders may impose restrictions on the transfer or
registration of transfer of shares (including any security convertible into,
or carrying a right to subscribe for or acquire shares). A restriction does
not affect shares issued before the restriction was adopted unless the holders
of the shares are parties to the restriction agreement or voted in favor of or
otherwise consented to the restriction.
A restriction on the transfer or registration of transfer of shares may be
authorized:
(a) to maintain the corporation's status when it is dependent on the number
or identity of its shareholders;
(b) to preserve entitlements, benefits or exemptions under federal or local
laws; and
(c) for any other reasonable purpose.
A restriction on the transfer or registration of transfer of shares may:
(a) obligate the shareholder first to offer the corporation or other persons
(separately, consecutively or simultaneously) an opportunity to acquire the
restricted shares;
(b) obligate the corporation or other persons (separately, consecutively or
simultaneously) to acquire the restricted shares;
(c) require as a condition to such transfer or registration, that any one or
more persons, including the holders of any of its shares, approve the transfer
or registration if the requirement is not manifestly unreasonable; or
(d) prohibit the transfer or the registration of transfer of the restricted
shares to designated persons or classes of persons, if the prohibition is not
manifestly unreasonable.
A restriction on the transfer or registration of transfer of shares is valid
and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this Section and its existence is noted
conspicuously on the front or back of the certificate or is contained in the
information statement required by this Article 6 with regard to shares issued
without certificates. Unless so noted, a restriction is not enforceable
against a person without knowledge of the restriction.
6.6 Corporation's Acquisition of Shares. The corporation may acquire its own
shares and the shares so acquired constitute authorized but unissued shares.
If the articles of incorporation prohibit the reissue of acquired shares, the
number of authorized shares is reduced by the number of shares acquired,
effective upon amendment of the articles of incorporation, which amendment may
be adopted by the shareholders or the board of directors without shareholder
action. The articles of amendment must be delivered to the Secretary of State
and must set forth:
(a) the name of the corporation;
(b) the reduction in the number of authorized shares, itemized by class and
series;
(c) the total number of authorized shares, itemized by class and series,
remaining after reduction of the shares; and
(d) a statement that the amendment was adopted by the board of directors
without shareholder action and that shareholder action was not required.
ARTICLE 7. DISTRIBUTIONS
7.1 Distributions to Shareholders. The board of directors may authorize, and
the corporation may make, distributions to the shareholders of the corporation
subject to any restriction sin the corporation's articles of incorporation and
in the Statutes.
7.2 Unclaimed Distributions. If the corporation has mailed three successive
distributions to a shareholder at the shareholder's address as shown on the
corporation's current record of shareholders and the distributions have been
returned as undeliverable, no further attempt to deliver distributions to the
shareholder need be made until another address for the shareholder is made
known to the corporation, at which time all distributions accumulated by
reason of this Section, except as otherwise provided by law, be mailed to the
shareholder at such other address.
ARTICLE 8. MISCELLANEOUS
8.1 Inspection of Records by Shareholders and Directors. A shareholder or
director of a corporation is entitled to inspect and copy, during regular
business hours at the corporation's principal office, any of the records of
the corporation required to be maintained by the corporation under the
Statutes, if such person gives the corporation written notice of the demand at
least five business days before the date on which such a person wishes to
inspect and copy. The scope of such inspection right shall be as provided
under the Statutes.
8.2 Corporate Seal. The board of directors may provide a corporate seal
which may be circular in form and have inscribed thereon any designation
including the name of the corporation, the state of incorporation, and the
words "Corporate Seal."
8.3 Amendments. The corporation's board of directors may amend or repeal the
corporation's bylaws at any time unless:
(a) the articles of incorporation or the Statutes reserve this power
exclusively to the shareholders in whole or part; or
(b) the shareholders in adopting, amending, or repealing a particular bylaw
provide expressly that the board of directors may not amend or repeal that
bylaw; or
(c) the bylaw either establishes, amends, or deletes, a greater shareholder
quorum or voting requirement.
Any amendment which changes the voting or quorum requirement for the board
must meet the same quorum requirement and be adopted by the same vote and
voting groups required to take action under the quorum and voting requirements
then in effect or proposed to be adopted, whichever are greater.
8.4 Fiscal Year. The fiscal year of the corporation shall be established by
the board of directors.
DATED as of this 14th day of September, 1999.
/s/ Dennis Shen
- ---------------
President
NL-ORANGE, L.P.
BY NIPPON LANDIC (U.S.A.), INC.
A DELAWARE CORPORATION, GENERAL PARTNER
LANDLORD,
AND
DENNIS SHEN, dba GLOBAL PAC TECH
TENANT
OFFICE LEASE
THIS LEASE ("Lease") is made between NL-ORANGE, L.P., by NIPPON LANDIC (USA),
INC., a Delaware corporation, General Partner ("Landlord"), and the Tenant
described in Item 1 of the Basic Lease Provisions.
LEASE OF PREMISES
Landlord hereby leases to Tenant and Tenant hereby hires from Landlord,
subject to all of the terms and conditions set forth herein, those certain
premises (the "Premises") described in Item 3 of the Basic Lease Provisions
and as shown in the drawings attached hereto as Exhibit A-1. The Premises are
located in that certain office building (the Building) shown on Exhibit "A-2"
and whose street address is 770 The City Drive South, Orange, California
92868. The Building is located on that certain land (the Land) described on
Exhibit "A-3" attached hereto, which is also improved with landscaping,
parking facilities and other improvements and appurtenances. The Land,
together with all such improvements and appurtenances and the Building, are,
subject to Paragraph 18, collectively referred to herein as the "Project".
However, Landlord reserves the right to make such changes, additions and/or
deletions to the Land, the Building and the Project as it shall determine from
time to time.
BASIC LEASE PROVISIONS
1. Tenant: DENNIS SHEN, dba Global Pac Tech ("Tenant")
2. Building: NEXUS CITY SQUARE
Address: 770 The City Drive South
Orange, CA 92868
3. Description of Premises: Floor(s): Second Suite: 2200
Rentable Area: 1,587 square feet (see Exhibit A-4)
1,587
4. Tenant's Proportionate Share of Excess Operating Costs: 42721237% = 371,478
5. Basic Annual Rent (see Paragraphs 2 and 20):
Partial Lease Month:$ 75.12 per day
First Lease Year $27,042.48
6. Initial Monthly Installment of Basic Annual Rent: $ 2,253,54
($1.42 per square foot of Rentable Area)
Installment payable upon execution: $2,253.54
7.Security Deposit: $4,507.08
8. Base Operating Costs: Tenant shall pay its pro rata share of Operating
Costs increases over the Base Year 1996 subject to adjustment as provided in
Section 3(e) of the Lease
9. Term: One (1) year
10. Target Commencement Date: August 1, 1996
11.Broker[s]: Cushman & Wakefield of California, Inc.
12.Permitted Use: General office use
13.Number of Parking Spaces (see Paragraph 18): 4:1000
14.Addresses for Notices:
To: Tenant to: Landlord
Prior to occupancy of the Premises: NL-Orange L.P.
%Insignia Commercial Group, Inc.
Dennis Shen 770 The City Drive South
Global Pac Tech Suite 2900
1201 E. Ball Road, #Orange, CA 92668
Anaheim, CA 92805
After occupancy of the Premises:
Global Pac Tech
770 The City Drive South, Suite 2200
Orange, CA 92868
15.All payments payable under this Lease shall be sent to Landlord at the
address specified in Item 14 or to such other address as Landlord or
Landlord's Agent may designate.
16.Guarantor: N/A
17.Landlord's Agent: Insignia Commercial Group, Inc.
770 The City Drive South, Suite 2900
Orange, California 92668
18.Date of this Lease: July 15, 1996
IN WITNESS WHEREOF, the parties hereto have executed this Lease, consisting of
the foregoing Basic Lease Provisions, the provisions of the Standard Lease
Provisions (the Standard Lease Provisions) (consisting of Paragraphs 1 through
20 which follow) and Exhibits A-1" through A-4 and B through H, inclusive, all
of which are incorporated herein by this reference. In the event of any
conflict between the provisions of the Basic Lease Provisions and the
provisions of the Standard Lease Provisions, the Standard Lease Provisions
shall control.
LANDLORD
NL-ORANGE, L.P.
Nippon Landic (U.S.A.), Inc., a
Delaware corporation, as General Partner
By: /s/ Mitsuhiko Hashimoto
------------------------------------
Mitsuhiko Hashimoto, General Manager
Date: July 19, 1996
TENANT
DENNIS SHEN, dba GLOBAL PAC TECH
By: /s/ Dennis Shen
---------------
Dennis Shen
Its:
Date: July 18, 1996
TABLE OF CONTENTS
Page
1.TERM -1-
2.BASIC ANNUAL RENT AND SECURITY DEPOSIT -1-
3.ADDITIONAL RENT -2-
4.IMPROVEMENTS AND ALTERATIONS -3-
5.REPAIRS -4-
6.USE OF PREMISES -4-
7.UTILITIES AND SERVICES -5-
8.NONLIABILITY AND INDEMNIFICATION OF LANDLORD; INSURANCE -6-
9.FIRE OR CASUALTY -8-
10.EMINENT DOMAIN -8-
11.ASSIGNMENT AND SUBLETTING -8-
12.DEFAULT -10-
13.ACCESS; CONSTRUCTION -12-
14.BANKRUPTCY -12-
15.SUBSTITUTION OF PREMISES -13-
16.SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATES -13-
17.SALE BY LANDLORD; NONRECOURSE LIABILITY -14-
18.PARKING; COMMON FACILITIES -14-
19.MISCELLANEOUS -15-
(a)Attorneys' Fees -15-
(b)Waiver -15-
(c)Notices -15-
(d)Labor -15-
(e)Security -15-
(f)Storage -15-
(g)Holding Over -16-
(h)Condition of Premises -16-
(i)Quite Possession -16-
(j)Matters of Record -16-
(k)Project Financing -16-
(l)Successors and Assigns -16-
(m)Brokers -16-
(n)Name -16-
(o)Examination of Lease, Confidentiality -16-
(p)Time -17-
(q)Defined Terms and Marginal Headings -17-
(r)Conflict of Laws; Prior Agreements; Separability -17-
(s)Authority -17-
(t)Common Areas -17-
(u)Joint and Several Liability -17-
(v)Rental Allocation -17-
(w)Rules and Regulations -17-
(x)Financial Statements -17-
(y)Landlord's Agent -17-
20.ADDENDA -17-
(a)Transportation Management -18-
(b)Non-smoking -18-
TABLE OF EXHIBITS
Exhibit "A-1"Floor Plan[s]
Exhibit "A-2"Plot Plan of Building
Exhibit "A-3"Legal Description
Exhibit "A-4"Rentable Area
Exhibit "B"Landlord's Obligation
Exhibit "C"Requirements for Alterations
Exhibit "D"Standards for Utilities and Services
Exhibit "E"Building Rules and Regulations
Exhibit "F"Form Estoppel Certificate
Exhibit "G"Tenant's Initial Certificate
<PAGE>
STANDARD LEASE PROVISIONS
TERM
(a)Unless earlier terminated in accordance with the provisions hereof, the
initial term of this Lease shall be the period shown in Item 9 of the Basic
Lease Provisions; provided, however, in the event the Commencement Date
(defined below) occurs on a date other than the first (1st) day of a calendar
month, there shall be added to the term the partial month (the "Partial Lease
Month") from the Commencement Date to the first (1st) day of the calendar
month following the Commencement Date. [As used herein, "term" shall refer to
the initial term described in Item 9 of the Basic Lease Provisions and,
provided the same is duly exercised and commences, the Extended Term described
in Subparagraph 20(a).]
(b)Subject to the provisions of this Paragraph 1, the term shall commence on
the date (the "Commencement Date") which is the earlier of the date Landlord
delivers the Premises to Tenant or the date Tenant takes possession or
commences the use of the premises for any business purpose (including moving
in). Landlord shall be deemed to have delivered the Premises to Tenant on the
date determined by Landlord's Space Planner (defined in the Work Letter
described below) to be the date of substantial completion of the Tenant Work
(defined in the Work Letter). Notwithstanding the foregoing, in the event
that Landlord is delayed in delivering the Premises by reason of any act or
omission of Tenant, including, without limitation, those specified in the Work
Letter (the "Work Letter") attached hereto as Exhibit "B" (a "Tenant Delay"),
the term shall commence (unless Tenant takes possession or commences use of
the Premises prior thereto) on the date the Premises would have been delivered
by Landlord had the Tenant Delay(s) not occurred. This Lease shall be a
binding contractual obligation effective upon execution hereof by Landlord and
Tenant, notwithstanding the later commencement of the term of this Lease.
(c)Landlord may deliver the Premises to Tenant on or after the Target
Commencement Date described in Item 10 of the Basic Lease Provisions.
Landlord shall use reasonable efforts to give Tenant at least fifteen (15)
days' notice of the date upon which, in Landlord's opinion, the Commencement
Date shall occur; provided, however, that in the event the Commencement Date
is delayed or otherwise does not occur on the date specified, this Lease shall
not be void or voidable, nor shall Landlord be liable to Tenant for any loss
or damage resulting therefrom.
BASIC ANNUAL RENT AND SECURITY DEPOSIT
(a)Tenant agrees to pay during the Partial Lease Month and each Lease Year
(defined below) of the term of this Lease as Basic Annual Rent ("Basic Annual
Rent") for the Premises the sums shown for such periods in Item 5 of the Basic
Lease Provisions. For purposes of this Lease, a "Lease Year" shall be each
twelve (12) calendar month period commencing on (i) the Commencement Date (or
anniversary thereof) if the Commencement Date occurs on the first (1st) day of
a month, or otherwise (ii) on the first (1st) day of the calendar month
following the Commencement Date (or anniversary thereof.
(b)Except as expressly provided to the contrary herein, Basic Annual Rent
shall be payable in equal consecutive monthly installments, in advance,
without deduction or offset, commencing on the Commencement Date and
Continuing on the first (1st) day of each calendar month thereafter. The
first (1st) full monthly installment of basic Annual Rent, described in Item 6
of the Basic Lease Provisions, shall be payable upon Tenant's execution of
this Lease. If the Commencement Date is a day other than the first (1st) day
of a calendar month, then the Rent (defined below) for the Partial Lease Month
(the "Partial Lease Month Rent") shall be calculated on the per diem basis
shown therefor in Item 5 of the Basic Lease Provisions for the number of days
of such month from and including the Commencement Date. The Partial Lease
Month Rent shall be payable by Tenant prior to the date that Tenant takes
possession or commences use of the Premises for any business propose
(including moving in). Basic Annual Rent, all forms of additional rent
payable hereunder by Tenant and all other amounts, fees, payments or charges
payable hereunder by Tenant shall (i) each constitute rent payable hereunder
(and shall sometimes collectively be referred to herein as "Rent"), (ii) be
payable to Landlord when due without any prior demand therefor in lawful money
of the United States and, except as may be expressly provided to the contrary
herein, without any offset or deduction whatsoever, and (iii) be payable to
Landlord at the address of Landlord described in Item 2 of the Basic Lease
Provisions or to such other person or to such other place as Landlord may from
time to time designate in writing to Landlord.
(c)Tenant has paid or will pay Landlord such sum[s] at such time[s] as are set
forth with respect to the "Security Deposit" (the "Security Deposit") in Item
7 of the Basic Lease Provisions as security for the performance by Tenant of
Tenant's obligations hereunder. If, at any time during the term of this Lease
or any Extended Term thereof, Tenant's Basic Annual Rent is increased above
the amount initially paid hereunder, the Security Deposit shall be increased
in the same proportion, and Tenant shall deposit cash with Landlord in an
amount sufficient to increase the Security Deposit to the appropriate amount.
Landlord shall not be required to keep the Security Deposit separate from its
general funds, and Tenant shall not be entitled to interest thereon. If
Tenant defaults with respect to any provision of this Lease, including,
without limitation, the provisions relating to the payment of Rent or the
cleaning or restoration of the Premises upon the termination of this Lease,
Landlord may, but shall not be required to, use, apply or retain all or any
part of the Security Deposit (i) for the payment of any Rent or any other sum
in default, (ii) for the payment of any other amount which Landlord may spend
or become obligated to spend by reason of Tenant's default hereunder, or (iii)
to compensate Landlord for any other loss or damage which Landlord may suffer
by reason of Tenant's default hereunder, including, without limitation, costs
and attorneys' fees incurred by Landlord to recover possession of the Premises
following a default by Tenant hereunder. If any portion of the Security
Deposit is so used or applied, Tenant shall, upon demand therefor, deposit
cash with Landlord in an amount sufficient to restore the Security Deposit to
the appropriate amount, as required to be maintained by Tenant hereunder. If
tenant shall fully perform every provision of this Lease to be performed by
it, the Security Deposit or any balance thereof shall be returned to Tenant
(or, at Landlord's option, to the last assignee of Tenant's interest
hereunder) within fourteen (14) days following the expiration of the term of
this Lease; provided, however, that Landlord may retain the Security Deposit
until such time as any amount due from Tenant in accordance with Paragraph 3
below has been determined and paid to Landlord in full. If the obligation of
Tenant to pay the initial Security Deposit has been waived by Landlord in Item
7 of the Basic Lease Provisions, then this provision shall not be applicable
unless and until Tenant defaults under this Lease, in which event Landlord
may, at its sole option, and as a condition precedent to any cure by Tenant
hereunder, require that Tenant immediately pay the Security Deposit, which
shall be in an amount equal to the then Monthly Installment of the Basic
Annual Rent.
(d)The parties agree that for all purposes hereunder the Premises shall be
stipulated to contain the number of squire feet of Rentable Area (defined in
Exhibit "A-4") described in Item 3 of the Basic Lease Provisions. Upon the
request of Landlord, Landlord's Space Planner shall verify the exact number of
square feet of Rentable Area in the Premises. In the event there is a
variation of three percent (3%) or more from the umber of square feet
specified in Item 3 of the Basic Lease Provisions, Landlord and Tenant shall
execute an amendment to this Lease for the purpose of making appropriate
adjustments to the Basic Annual Rent, the Security Deposit, Tenant's
Proportionate Share (defined below) and such other provisions hereof as shall
be appropriate under the circumstances.
ADDITIONAL RENT
(a)Subject to the provisions of this lease, if Operating Costs (defined below)
for the Project for any calendar year during the term of this Lease exceed
Base Operating Costs (defined below), Tenant shall pay to Landlord as
additional rent an amount equal to Tenant's Proportionate Share of such
excess.
(b)"Tenant's Proportionate Share" is, subject to the provisions of this
Paragraph 3, the percentage number described in Item 4 of the Basic Lease
Provisions. Tenant's Proportionate Share represents a fraction, the numerator
of which is the number of square feet of Rentable Area in the Premises and the
denominator of which is the number of square feet of Rentable Area in the
Project, as determined by Landlord pursuant to Subparagraph 2(d) above.
(c)"Base Operating Costs", during the term of this Lease, including, without
limitation, any Extended Term, equals the product of (i) the amount specified
in Item 8 of the Basic Lease Provisions, and (ii) the number of square feet of
Rentable Area contained in the Project.
(d)"Operating Costs" means all costs, expenses and obligations incurred or
payable by Landlord in connection with the operation, ownership, repair
management or maintenance of the Project during or allocable to the term of
this Lease, including, without limitation, the following:
(i)All real property taxes, assessments, license fees, excises, levies,
charges or impositions and other similar governmental ad valorem or other
charges levied on or attributable to the Project or its ownership, operation
or transfer, and all taxes, charges, assessments or similar impositions
imposed in lieu of the same (collectively, "Real Estate Taxes"). "Real Estate
Taxes" shall also include all taxes, assessments, license fees, excise,
levies, charges or similar impositions imposed by any governmental agency,
district, authority or political subdivision (A) on any interest of Landlord,
any mortgagee of Landlord or any interest of Tenant in the Project, the
Premises or in this Lease, or on the occupancy or use of space in the Project
or the Premises; (B) on the gross or net rentals or income from the Project,
the Rent received hereunder, or on Landlord's "right" or "rights" to any of
the foregoing or on Landlord's business of leasing the Premises, the Building
or the project, including, without limitation, any gross income tax or excise
tax levied by any federal, state or local governmental entity with respect to
the receipt of Rent or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy of the project,
or portions thereof; (C) measured by the gross square footage of the Project,
the Premises, or any portion thereof, or by the number of actual, estimated or
potential occupants of the Project, the number of vehicular trips generated by
or associated with the Project, or the number of parking spaces contained
within the Project, or for any transportation, arts, housing or environmental
plan, fund or system instituted within or for any geographic area in which the
Building is located, or any similar measure; (D) on the transfer of or the
transaction represented by this Lease or any lease of space in the Project or
on any document creating or transferring an interest in this Lease: (E) on the
construction, removal or alteration of improvements in the Project; (F) for
the provision of amenities, services or rights of use such as fire protection,
police protection, street, sidewalk, lighting, sewer or road maintenance,
refuse removal or janitorial services or for any other service, without regard
to whether such services were formerly provided by governmental or quasi-
governmental agencies to property owners or occupants at no cost or at minimal
cost; and (G) related to any transportation plan, fund or system instituted
within the geographic area of the Project or otherwise applicable to the
Premises, the Project, or any portion thereof. "Real Estate Taxes" shall not
include any capital stock, estate or inheritance tax imposed by the State of
California for the federal government; and
(ii)The cost of utilities (including taxes and other charges incurred in
connection therewith), but, subject to the provisions of Paragraph 7,
excluding the cost of Tenant's electrical current usage within its Premises,
fuel, supplies, equipment, tools, materials, service contracts, janitorial
services, waste and refuse disposal, gardening and landscaping, insurance
(including, but not limited to, public liability, fire, property damage,
flood, rental loss, rent continuation, boiler machinery, business
interruption, contractual indemnification, earthquake and All Risk coverage
insurance for up to the full replacement cost of the Project and such other
insurance as is customarily carried by operators of other first-class
buildings in the County of Orange) to the extent carried by Landlord in its
discretion (and the deductible portion of any insured loss otherwise covered
by such insurance), the cost of compensation, including employment, welfare
and social security taxes, paid vacation days, disability, pension, medical
and other fringe benefits of all persons (including independent contractors)
who perform services connected with the operation, maintenance or repair of
the Project, personal property taxes on and maintenance and repair of
equipment and other personal property used in connection with the operation,
maintenance or repair of the Project, such auditors' fees and legal fees as
are incurred in connection with the operation, maintenance or repair of the
project, costs incurred for administration and management of the Project,
whether by Landlord or by an independent contractor, administrative expenses,
management fees, management office operational expenses, rental expenses for
or a reasonable allowance for depreciation of, personal property used in the
operation, maintenance or repair of the Project, license, permit and
inspection fees, all costs and expenses required by any governmental ro quasi-
governmental authority or by applicable law, for any reason, including capital
improvements, whether capitalized or not, the cost of any capital improvements
made to the Project by Landlord that improve life-safety systems or reduce
operating expenses (such as costs to be amortized over such reasonable periods
as Landlord shall determine with a return on capital at such rate as would
have been paid by Landlord on funds borrowed for the purpose of constructing
such capital improvements), the cost of air-conditioning, heating,
ventilating, plumbing, elevator maintenance and repair, sign maintenance, and
Common Area (defined in Paragraph 18) repair, resurfacing, operation and
maintenance, the cost of providing security services, if any, deemed
appropriate by Landlord, and any other cost or expense incurred or payable by
Landlord in connection with the operation, repair, management or maintenance
of the Project.
(e)Operating Costs for any calendar year during which actual occupancy of the
Project is less than ninety-five percent (95%) of the Rentable Area of the
Project shall be appropriately adjusted to reflect ninety-five percent (95%)
occupancy of the existing Rentable Ares of the Project during such period. In
determining Operating Costs, if any services or utilities are separately
charged to tenants of the Project or others, Operating Costs shall be adjusted
by Landlord to reflect the amount of expense which would have been incurred
for such services or utilities on a full-time basis of normal Project
operating hours. In the event (i) the Commencement Date shall be a date other
than January 1, (ii) the date fixed for the expiration of the term shall be a
date other than December 31, (iii) of any early termination of this Lease, or
(iv) of any increase or decrease in the size of the Premises, then in each
such event, an appropriate adjustment in the application of this Paragraph 3
shall, subject to the provisions of this Lease, be made to reflect such event
on a basis determined by Landlord to be consistent with the principles
underlying the provisions of this Paragraph 3.
(f)Prior to the commencement of each calendar year of the term following the
Commencement Date, Landlord shall have the right to give to Tenant a written
estimate of Tenant's Proportionate Share of the projected excess, if any, of
the Operating Costs for the Project for the ensuing year over the Base
Operating Costs. Tenant shall pay such estimated amount to Landlord in equal
monthly installments, in advance on the first (1st) day of each month during
such year. Subject to the provisions of this Lease, Landlord shall endeavor
to furnish to Tenant within a reasonable period after the end of each calendar
year, a statement indicating in reasonable detail the excess of Operating
Costs over Base Operating Costs for such period, and the parties shall, within
thirty (30) days thereafter, make any payment or allowance necessary to adjust
Tenant's estimated payments to Tenant's actual share of such excess as
indicated by such annual statement. Any payment due Landlord shall be payable
by Tenant on demand from Landlord. Any amount due Tenant shall be credited
against installments next becoming due under this Subparagraph 3(f).
(g)Tenant shall pay ten (10) days before delinquency, all taxes and
assessments (i) levied against any personal property or trade fixtures of
Tenant in or about the Premises, (ii) based upon the gross or net Rent payable
hereunder, and (iii) based upon this Lease or any document to which tenant is
a party creating or transferring an interest in this Lease or an estate in all
or any portion of the Premises. If any such taxes or assessments are levied
against Landlord or Landlord's property or if the assessed value of the
Project is increased by the inclusion therein of a value placed upon such
personal property or trade fixtures, Tenant shall, upon demand, reimburse
Landlord for the taxes and assessments so levied against Landlord, or such
taxes, levies and assessments resulting from such increase in assessed value.
(h)Any delay or failure of Landlord in (i) delivering any estimate or
statement described in this Paragraph 3, or (ii) computing or billing Tenant's
Proportionate Share of excess Operating Costs shall not constitute a waiver of
its right to require an increase in Rent, or in any way impair, the continuing
obligations of Tenant under this Paragraph 3. Without limiting the generality
of the foregoing, Landlord may at any time during the term hereof recalculate
and correct the amount of Tenant's Proportionate Share of excess Operating
Costs, and Tenant shall pay any amount due on demand by Landlord. In the
event of any dispute as to any Rent due under this Paragraph 3, Tenant shall
have the right after reasonable notice and at reasonable time to inspect
Landlord's accounting records at the accounting office of Landlord's
management company. If after such inspection, Tenant still disputes such
additional rental, upon Tenant's written request therefor, a certification as
to the proper amount of Operating Costs and the amount due to or payable by
Tenant shall be made by Landlord's independent certified public accountant.
Such certification shall be final and conclusive as to all parties. Tenant
agrees to pay the cost of such certification and the investigation with
respect thereto, and no adjustments in Tenant's favor shall be made unless it
is determined that Landlord's original statement was in error in Landlord's
favor by more than five percent (5%). Tenant waives the right to dispute any
matter relating to the calculation of Operating Costs or other forms of Rent
under this Paragraph 3 if any claim or dispute is not asserted by Tenant in
writing to Landlord within one (1) year of delivery to Tenant of the original
billing statement with respect thereto.
(i)Subject to the provisions of this Paragraph 3, the rights and obligations
of Landlord and Tenant with respect to payments to be made hereunder in regard
to excess Operating Costs incurred or allocable to periods prior to the
expiration or sooner termination of this Lease shall survive such expiration
or termination.
4.IMPROVEMENTS AND ALTERATIONS
(a)Landlord's sole construction obligation under this Lease is set forth in
the Work Letter attached hereto as Exhibit "B".
(b)Tenant shall not make any alterations, additions or improvements to the
Premises (collectively, "Alterations") without (i) the prior written consent
of Landlord, and (ii) compliance with such nondiscriminatory requirements
concerning such Alterations as may be imposed by Landlord from time to time.
Without limiting the foregoing, Landlord may require, at a minimum, compliance
with the requirements set forth in Exhibit "C" attached hereto. All
Alterations shall be made by Tenant, at Tenant's sole cost and expense, and
shall be diligently prosecuted to completion. The cost of any modifications
of Project improvements outside or inside of the Premises required by any
governmental agency as a condition or the result of Tenant's Alterations shall
be borne by Tenant. Any contractor or person making such Alterations shall
first be approved in writing by Landlord. Upon the expiration of earlier
termination of this Lease, Landlord may elect to have Tenant either (i)
surrender with the Premises any or all of Alterations as Landlord, Landlord
shall determine (except trade fixtures not attached to the Premises), in which
case, such Alterations shall become the property of Landlord, or (ii) promptly
remove any or all of such Alterations designated by Landlord to be removed, in
which case, Tenant shall repair and restore the Premises to its original
condition as of the date of substantial completion of the Tenant Work,
reasonable wear and tear excepted.
(c)Tenant shall keep the Premises, the Building and the Project free from any
and all liens arising out of any work performed, materials furnished, or
obligations incurred by or for Tenant. In the event that Tenant shall not,
within ten (10) days following the imposition of any such lien, cause the same
to be released of record by payment or posting of a bond in a form and issued
by a surety acceptable to Landlord, Landlord shall have the right, but not the
obligation, to cause such lien to be released by such means as it shall deem
proper (including payment of or defense against the claim giving rise to such
lien); in such case, Tenant shall reimburse Landlord for all amounts so paid
by Landlord in connection therewith, together with all of Landlord's costs and
expenses, with interest thereon at the Default Rate (defined below). Such
rights of Landlord shall be in addition to all other remedies provided herein
or by law.
REPAIRS
(a)Landlord shall use commercially reasonable efforts to keep the Common Areas
of the Building and the Project in a clean and neat condition. Subject to
Subparagraph 5(b) below, Landlord shall make all necessary repairs, within a
reasonable period following receipt of notice of the need therefor from
Tenant, to the exterior walls, exterior doors and windows of the Building, and
to public corridors and other public areas of the Project not constituting a
portion of any tenant's premises and shall use commercially reasonable efforts
to keep all Building standard equipment used by Tenant in common with other
Tenants in good condition and repair, reasonable wear and tear excepted.
Notwithstanding the foregoing, Tenant shall be solely responsible for the
repair and maintenance of, and all damage to, the Building or the Project
resulting from the design and operation of all improvements which are not
Building Standard Installations (described in the Work Letter) in or serving
the Premises installed at the request of Tenant (regardless of whether
installed by Landlord, its agents or contractors or third-party contractors).
Except as provided in Paragraph 9, there shall be no abatement of Rent, and
Landlord shall not be liable for any injury to, or damage suffered by Tenant,
including, without limitation, interference with Tenant's business arising
from the making of any repairs, alterations or improvements in or to any
portion of the Premises, the Building or the Project. Tenant waives the right
to make repairs at Landlord's expense under Sections 1941 and 1942 of the
California Civil Code, and under all other similar laws, statutes or
ordinances now or hereafter in effect.
(b)Tenant, at its expense, (i) shall keep the Premises and all fixtures
contained therein in a safe, clean and neat condition, and (ii) shall bear the
cost of maintenance and repair, by contractors selected by Landlord, of all
facilities which do not constitute Base Building Work (defined in the Work
Letter) located in the Premises, including, without limitation, lavatory,
shower, toilet, wash basin and kitchen facilities, and heating and air-
conditioning systems (including all plumbing connected to said facilities or
systems installed by or on behalf of Tenant or existing in the Premises at the
time of Landlord's delivery of the Premises to Tenant). Tenant shall make all
repairs to the Premises not required to be made by Landlord under Subparagraph
5(a) above with replacements of any materials to be made by use of materials
of equal or better quality. Tenant shall do all decorating, remodeling,
alteration and painting required by Tenant during the term of this Lease.
Tenant shall pay for the cost of any repairs to the Premises, the Building or
the Project made necessary by any negligence or wilful misconduct of Tenant or
any of its assignees, subtenants, employees or their respective agents,
representatives, contractors, or other persons permitted in or invited to the
Premises or the Project by Tenant.
(c)Upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises in a safe, clean and neat condition; in the event that
Tenant defaults with respect to this provision, in addition to any and all
other remedies of Landlord, Landlord may use, apply ro retain all or any part
of the Security Deposit with respect to such default. Tenant shall remove
from the Premises all trade fixtures (which are not required to be surrendered
with the Premises pursuant to the provisions of Subparagraph 4(b) hereof),
furnishings and other personal property of Tenant, shall repair all damage
caused by such removal, and shall restore the Premises to its original
condition, reasonable wear and tear excepted. In addition to all other rights
Landlord may have, in the event Tenant does not so remove any such fixtures,
furnishings or personal property, Tenant shall be deemed to have abandoned the
same, in which case, Landlord may store the same, at Tenant's sole cost and
expense, appropriate the same for itself, and/or sell the same in its
discretion.
USE OF PREMISES
(a)Tenant shall use the Premises only for the purposes set forth in Item 12 of
the Basic Lease Provisions and shall not use the Premises or permit the
Premises to be used for any other purpose.
(b)Tenant shall not at any time use or occupy the Premises, or permit any act
or omission in or about the Premises in violation of any law, statute,
ordinance or any governmental rule, regulation or order (collectively, "Law"),
and Tenant shall, upon written notice from Landlord, discontinue any use of
the Premises which is a violation of Law. If any Law shall, by reason of the
natures of Tenant's use or occupancy of the Premises, impose any duty upon
Tenant or Landlord with aspect to (i) modification, operation or other
maintenance of the Premises, the Building or the Project, or (ii) the use,
alteration or occupancy thereof, Tenant shall comply in full at its expense
with such Use.
(c)Tenant shall not at any time use or occupy the Premises in violation of the
certificates of occupancy issued for the Building or the Premises, and in the
event that any department of the State of California or the city or county in
which the Project is located shall at any time contend or declare that the
Premises are used or occupied in violation of such certificate or certificates
of occupancy, any Law or any recorded covenants, conditions and restrictions
affecting the Project, Tenant shall, upon five (5) days' notice from Landlord
or any such governmental agency, immediately discontinue such use of the
Premises and otherwise immediately remedy such violation). The failure by
Tenant to discontinue such use shall be considered a default under this Lease,
and Landlord shall have the right to exercise any and all rights and remedies
provided herein or by default under this Lease, and Landlord shall have the
right to exercise any and all rights and remedies provided herein or by Law.
The statement in this Lease of the nature of the business to be conducted by
Tenant in the Premises shall not be deemed or construed to constitute a
representation or guaranty by Landlord that such business will continue to be
lawful or permissible under any certificate or occupancy issued for the
Building or the Premises, or otherwise permitted by Law.
(d)Tenant shall not do or permit to be done anything which may invalidate or
increase the cost of any All Risk, property damage, liability or other
insurance policy covering the Building, the Project and/or property located
therein and shall comply with all rules, orders, regulations and requirements
of the Pacific Fire Rating Bureau or any other organization performing a
similar function. In addition to all other remedies of Landlord, Landlord may
require Tenant, promptly upon demand, to reimburse Landlord for the full
amount of any additional premiums charged for such policy or policies by
reason of Tenant's failure to comply with the provisions of this Paragraph 6.
(e)Tenant shall not in any way interfere with the rights or quiet enjoyment of
other tenants or occupants of the Premises, the Building or the Project.
Tenant shall not use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain,
or permit any nuisance in , on or about the Premises, the Building or the
Project. Tenant shall not place a load upon any portion of the Premises
exceeding the structural floor load (per square foot of area) which such area
was designated (and is permitted by Law) to carry or otherwise use any
Building system in excess of its capacity or in any other manner which may
damage such system or the Building. Business machines and mechanical
equipment shall be placed and maintained by Tenant, at Tenant's sole cost and
expense, in locations and in settings sufficient in Landlord's reasonable
judgement to absorb and prevent vibration, noise and annoyance. Tenant shall
not commit or suffer to be committed any waste in, on, upon or about the
Premises, the Building or the Project.
(f)As used herein, the term "Hazardous Material" means any hazardous or toxic
substance, material or wast which is or becomes regulated by any local
governmental authority, the State of California or the United States
Government, including, without limitation, (i) any material or substance which
is defined or listed as a "hazardous waste," "extremely hazardous waste,"
"restricted hazardous waste," 'hazardous substance" or "hazardous material"
under any federal, state, or local law, statute, ordinance or any governmental
rule, regulation or order governing or in any way relating to the release,
use, generation, handling, leakage, dumping, discharge or disposal of any of
the above (collectively, "Hazardous Material Laws") (ii) petroleum or any
petroleum derivative, (iii) any flammable explosive or radioactive material,
(iv) any polychlorinated biphenyl, and (v) asbestos or any asbestos containing
material or derivative. Tenant hereby agrees that (i) Tenant and each of its
Affiliated (defined below), assignees, subtenants, and their respective
agents, servants, employees, representatives and contractors shall not bring
onto the Premises or the Project any Hazardous Material (other than customary
amounts of Hazardous Materials used for office supplies and cleaning materials
brought into the Premises by Tenant in the normal course of its tenancy and in
full compliance with all Hazardous Material Laws), (ii) Tenant shall
immediately notify Landlord in writing in the event Tenant becomes aware of or
suspects that there has been any release of any Hazardous Materials in, on or
about the Premises or the Project, or that nay person has stored or otherwise
brought onto the Project, or any portion thereof, any Hazardous Material
(other than customary amounts of office supplies and cleaning materials).
Tenant agrees to indemnity, defend (with counsel selected by Landlord),
protect and hold Landlord and each of its Affiliates harmless from and against
any and all claims, actions, administrative proceedings (including informal
proceedings), judgements, damages, punitive damages, penalties, fines, costs,
liabilities, interest or losses, including reasonable attorneys' fees and
expenses, consultant fees, and experts fees, together with all other costs and
expenses of any kind or nature that arise during or after the term of this
Lease directly or indirectly from or in connection with the presence,
handling, storage, release or discharge of any Hazardous Material in or into
the air, soil, surface water or groundwater at, on, about, under or within the
premises or the Project, or any portion thereof, generated, released,
discharged or otherwise brought onto, under or about the Project by Tenant or
any Affiliate thereof. Each of the covenants and agreements of Tenant set
forth in this Subparagraph 6(f) shall survive the expiration or earlier
termination of this Lease.
UTILITIES AND SERVICES
(a)Provided that Tenant is not in default hereunder, Landlord shall furnish,
or cause to be furnished to the Premises, the utility service and other
services described in Exhibit "D" attached hereto, subject to the conditions
and in accordance with the standards set forth therein and in this Lease.
(b)Tenant agrees to cooperate fully at all times with Landlord and to comply
with all regulations and requirements which Landlord may from time to time
prescribe for the use of the utilities and services described herein and in
Exhibit "D". Landlord shall not be liable to Tenant for the failure of any
other tenant, or its assignees, subtenants, employees, or their respective
invitees, agents or other representatives to comply with such regulations and
requirements.
(c)If Tenant requires utility service or other services in quantities greater
than, at times other than or of a type or quality different than that
generally furnished by Landlord pursuant to Exhibit "D", Tenant shall pay to
Landlord, upon receipt of a written statement therefor, Landlord's charge for
such additional or different utility service or services; provided, however,
if, in Landlord's judgement, such excess or different service cannot be
furnished unless additional risers, conduits, feeders, switchboards and/or
other facilities are installed in the Building, or otherwise are not then
being provided to other tenants in the Project (at the rate or level requested
by Tenant), the provision of such additional or different services shall be
subject to obligation to provide such additional or different utility or other
services if (i) the same is not generally available in first-class office
buildings in the area of the Project, (ii) in the case where additional
risers, conduits, feeders, switchboards and/or other appurtenances would be
required to be installed in the Building or Building systems, could create a
dangerous or hazardous condition or disturb or interfere with the use,
occupancy or quiet enjoyment of other tenants or otherwise adversely affect
the income stream, security satisfaction to Landlord for performance of such
obligation) of installation, use, maintenance, repair and removal of such
facilities, or (c) Landlord determines in good faith that installation,
operation, maintenance and/or cleaning services upon such terms and conditions
as shall be reasonably determined by Landlord, including payment of Landlord's
charge therefor. In the case of any additional utilities or services to be
provided hereunder, Landlord may require a switch and metering system to be
installed so as to measure the amount of such additional utilities or
services. the cost of installation, maintenance and repair of such system
shall be paid by Tenant upon demand.
(d)Landlord shall not be liable for, and Tenant shall not be entitled to, any
damages, abatement or reduction of Rent, or other liability by reason of any
failure to furnish any services or utilities described herein or in Exhibit
"D" for any reason, including, without limitation ,when caused by accident,
breakage, repairs, Alterations or other improvements to the Project, strikes,
lockouts or other labor disturbances or labor disputes or any character,
governmental regulation, moratorium or other governmental action, inability to
obtain electricity, water or fuel, or any other cause beyond Landlord's
reasonable control Landlord shall be entitled to cooperate with the energy
conservation efforts of governmental agencies or utility suppliers. No such
failure, stoppage or interruption of any such utility or service shall be
construed as an eviction of Tenant, nor shall the same relieve Tenant from any
obligation to perform any covenant or agreement under this Lease. In the
event of any failure, stoppage or interruption thereof, Landlord shall use
reasonable efforts to attempt to restore all services promptly. No
representation is made by Landlord with respect to the adequacy or fitness of
the Building's ventilating, air-conditioning or other systems to maintain
temperatures as may be required for the operation of any computer, data
processing or other special equipment of Tenant or for any other purpose.
(e)Landlord reserves the right from time to time to make reasonable and
nondiscriminatory modifications to the above standards (including, without
limitation, those described in Exhibit "D") for utilities and services.
8.NONLIABILITY AND INDEMNIFICATION OF LANDLORD; INSURANCE
(a)Landlord shall not be liable to Tenant, and Tenant hereby waives all claims
against Landlord, its partners, officers, trustees, affiliates, directors,
employees, contractors, agents and representatives (collectively,
"Affiliates") for any injury or damage to any person or property occurring or
incurred in connection with or in any way relating to the Premises, the
Building or the Project from any cause, including, without limitation, by
reason of the active or passive negligence of Landlord or its Affiliates.
Without limiting the foregoing, neither Landlord nor any of its Affiliates
shall be liable for and there shall be no abatement of Rent for (i) any damage
to Tenant's property stored or entrusted to Affiliates of Landlord, (ii) loss
of or damage to any property by theft or any other wrongful or illegal act, or
(iii) any injury or damage to persons or property resulting from fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak from any part of the Building or the Project or from the pipes,
appliances, appurtenances or plumbing works therein or from the roof, street
or sub-surface or from any other place or resulting from dampness or any other
cause whatsoever or from the acts or omissions of other tenants, occupants or
other visitors to the Building or the Project, or from any other cause
whatsoever, (iv) any diminution or shutting off of light, air or view by any
structure which may be erected on lands adjacent to the Building, whether
within or outside of the Project, or (v) any latent or other defect in the
Premises, the Building or the Project. In addition and without limitation to
the other provisions of Subparagraphs (a) and (b) of this Paragraph 8, Tenant
agrees that in no case shall Landlord ever be responsible or liable on any
theory for any injury to Tenant's business, loss of profits, loss of income or
any other form of consequential damage. Tenant shall give prompt notice to
Landlord in the event of (A) the occurrence of a fire or accident in the
Premises or in the Building, or (B) the discovery of any defect therein or in
the fixtures or equipment thereof.
(b)Tenant shall indemnify, defend (with legal counsel selected by Landlord ),
protect and hold Landlord harmless from and against any and all claims, suits,
judgements, losses, costs, obligations, damages, expenses, interest and
liabilities, including, without limitation, reasonable attorneys' fees, for
any injury or damage to any person or property whatsoever arising out of or in
connection with this Lease, the Premises or Tenant's activities in the
Project, including, without limitation, when such injury or damage has been
caused in whole or in part by the act, negligence, fault or omission of
Tenant, its agents, servants, contractors, employees, representatives,
licensees or invitees, or by reason of the active or passive negligence of
Landlord or its Affiliates. Without limiting the foregoing, Tenant shall
reimburse Landlord for all expenses, damages and fines incurred or suffered by
Landlord by reason of any breach, violation or non-performance by Tenant, its
agents, servants or employees, of any covenant or provision of this Lease, or
by reason of damage to persons or property caused by moving property of or for
Tenant in or out of the Building, or by the installation or removal of
furniture of other property, or by reason of carelessness, negligence or
improper conduct of Tenant or its agents, employees or servants in the use or
occupancy of the Premises. The provisions of this Subparagraph 8(b) shall
survive the expiration or earlier termination of this Lease.
(c)Tenant hereby agrees to maintain in full force and effect at all times
during the term of this Lease, at its sole cost and expense, for the
protection of Tenant and Landlord, as their interests may appear, policies of
insurance issued by a responsible carrier or carriers, qualified to do
business in the State of California, with a financial class rating of not less
than x and a policy holder rating of not less than A in the most recent Best's
Key Rating Guide and otherwise acceptable to Landlord, which afford the
following coverages:
(i)Comprehensive general liability insurance (or commercial general liability
insurance) or such successor comparable form of coverage, including blanket
contractual liability, broad form property damage, independent contractor's
coverage, personal injury, completed operations, products liability, cross
liability and severability of interest clauses, and fire damage, written on an
"occurrence" basis with coverage of not less than Five Million Dollars
($5,000,000.00) combined single limit per occurrence for both bodily injury
(including death) and property damage;
(ii)All Risk Insurance, including, without limitation, insurance covering loss
or damage resulting or arising from sprinkler leakage, in an amount sufficient
to cover the full cost of replacement of all improvements to the Premises
(other than Building Standard Installations) and all of Tenant's fixtures and
other personal property. The proceeds of such insurance shall be devoted
exclusively to the replacement of the same unless this Lease shall cease and
terminate pursuant to the provisions of Paragraph 9 hereof;
(iii)Loss of income insurance in such amounts as will cover Tenant for direct
or indirect loss of earnings resulting from all risks or perils customarily
insured against by commercially prudent tenants, as reasonably determined by
Landlord; and
(iv)Workers' Compensation and Employer's Liability Insurance (as required by
law).
(d)Tenant may, with the prior written consent of Landlord, elect to have
reasonable deductibles (not to exceed One Thousand Dollars ($1,000.00)) under
the policy required pursuant to Subparagraph 8(c)(ii).
(e)Tenant shall deliver to Landlord at least thirty (30) days prior to the
time such insurance is first required to be carried by Tenant, and thereafter
at least thirty (30) days prior to expiration of each such policy,
certificates of insurance evidencing the coverage required hereunder with
limits not less than those specified above. Such policies of insurance shall
be written as primary policies, not contributing with, and not in excess of
coverage which Landlord may carry. The certificate of insurance with respect
to the coverage described in Subparagraph 8(c)(i) above shall specifically
reflect insurance of Tenant's obligations under Subparagraph 8(b) above. Such
certificates shall name Landlord as an additional insured and shall expressly
provide that the interest of the same therein shall not be affected by any
breach by Tenant of any policy provision for which such certificates evidence
coverage. Further, all certificates shall expressly provide that not less
than thirty (30) days' prior written notice shall be given Landlord in the
event of material alteration or to cancellation of the coverages evidenced by
such certificates. If on account of the failure of Tenant to comply with the
provisions of this Paragraph 8, Landlord is adjudged a co-insurer by its
insurance carrier, then, in addition to all other remedies available to
Landlord, any loss or damage Landlord shall sustain by reason thereof shall be
borne by Tenant and shall be immediately paid by Tenant upon receipt of a bill
therefor and evidence of such loss.
(f)Upon demand, Tenant shall provide Landlord, at Tenant's sole cost and
expense, with such increased amount of existing insurance and such other
insurance with such limits and Landlord may require and such other hazard
insurance as the nature and condition of the Premises may require, in the
opinion of Landlord, to afford Landlord adequate protection for such risks.
However, in all cases such adjustments shall be based upon the requirements of
an institutional lender of Landlord or otherwise reasonable and consistent
with the requirements of other first-class office projects i the County of
Orange.
(g)Landlord makes no representation that the insurance coverage specified to
be carried by Tenant pursuant to this Paragraph 8 is adequate to protect
Tenant against Tenant's undertaking under the terms of this Lease or
otherwise, and in the event Tenant believes that any such insurance coverage
called for under this Lease is insufficient, Tenant shall provide, at its own
cost and expense, such additional insurance as Tenant deems adequate.
(h)Notwithstanding any provision of this Paragraph 8 to the contrary, in the
event that Landlord's insurance policies with respect to the Premises, the
Building or the Project permit a waiver of subrogation, Landlord hereby waives
any and all rights of recovery against Tenant for or arising out of damage to,
or destruction of, the Premises, the Building or the project, from causes then
included under standard fire and All Risk insurance policies with respect to
the Premises permit a waiver of damage or destruction. In the event that
Tenant's insurance policies with respect to the Premises permit a waiver of
subrogation, Tenant waives any and all rights of recovery against Landlord for
or arising out of damage to, or destruction of, any property of Tenant, from
causes then included under standard fire and All Risk insurance policies or
endorsements. Tenant represents that its present insurance policies now in
force permit such waiver. If at any time during the term of this Lease (i)
either party shall give less than five (5) days' prior written notice to the
other party certifying that any insurance carrier which has issued any such
policy shall refuse to consent to the aforesaid waiver of subrogation, or (ii)
such insurance carrier shall consent to such waiver only upon the payment of
an additional premium (and such additional premium is not paid by the other
party hereto), or (iii) such insurance carrier shall revoke a consent
previously given or shall cancel or threaten to cancel any policy previously
issued and then in force and effect, because of such waiver of subrogation,
then, in any of such events, the waiver of subrogation contained herein shall
thereupon be of no further force or effect as to the loss, damage or
destruction covered by such policy. If, however, at any time thereafter, a
consent to such waiver of subrogation shall be obtained without an additional
premium from any existing or substitute insurance carrier, the waiver
hereinabove provided for shall again become effective.
(i)Tenant shall not keep, use, sell or offer for sale in or upon the Premises
any article which may be prohibited by any insurance policy periodically in
force covering the Premises, the Building or the Project. Of any of
Landlord's insurance policies shall be canceled or cancellation shall be
threatened or the coverage thereunder reduced or threatened to be reduced in
any way because of the use of the Premises, or any part thereof, by Tenant or
any assignee, subtenant, licensee or invitee of Tenant, and if Tenant fails to
remedy the condition giving rise to such cancellation, threatened
cancellation, reduction of coverage, or threatened reduction of coverage,
within forty-eight (48) hours after notice thereof, Landlord may, at its
option, either terminate this Lease or enter upon the Premises and attempt to
remedy such condition, and Tenant shall promptly pay the cost thereof to
Landlord as additional Rent. Landlord shall not be liable for any damage or
injury caused to any property of Tenant or of others located on the Premises
resulting from such entry. If Landlord is unable, or elects not to remedy
such condition, then Landlord shall have all of the remedies provided for in
this Lease in the event of a default by Tenant.
(j)Tenant shall not do or permit to be done any act or things upon or about
the Premises of the Building, which will (i) result in the assertion of any
defense by the insurer to any claim under, (ii) invalidate, or (iii) be in
conflict with, the insurance policies of Landlord or Tenant covering the
Building, the Premises or fixtures and property therein, or which would
increase the rate of fire insurance applicable to the Building to an amount
higher than it otherwise would be; and Tenant shall neither do nor permit to
be done any act or thing upon or about the Premises or the Building which
shall or might subject Landlord to any liability or responsibility for injury
to any person or persons or to property, provided that nothing in this
Subparagraph 8(j) shall prevent Tenant's use of the Premises for the purposes
stated in Paragraph 6 hereof.
(k)If, as a result of any act or omission by or on the part of Tenant or
violation of this Lease, whether or not Landlord has consented to the same,
the rate of "All Risk" or other type of insurance maintained by Landlord on
the Building and fixtures and property therein, shall be increased to an
amount higher than it otherwise would be, Tenant shall reimburse Landlord for
all increases of Landlord's fire insurance premiums so caused, such
reimbursement to be Additional Rent payable within five (5) days after demand
therefor by Landlord. If, due to abandonment of, or failure to occupy the
demised premises by Tenant, any such insurance shall be canceled by the
insurance carrier, then Tenant hereby indemnities Landlord against liability
which would have been covered by such insurance. In any action or proceeding
wherein Landlord and Tenant are parties, a schedule or "make-up" of rates for
the Building or the Premises issued by the body making fire insurance rates or
established by insurance carrier providing coverage for the Building or
demised premises shall be presumptive evidence of the facts stated therein,
including the items and charges taken into consideration in fixing the "All
Risk" insurance rate then applicable to the Building or the Premises.
9.FIRE OR CASUALTY
(a)Subject to the provisions of this Paragraph 9, in the event the Premises,
or access thereto, is wholly or partially destroyed by fire or other casualty,
Landlord shall (to the extent permitted by Law and covenants, conditions and
restrictions then applicable to the Project) rebuild, repair or restore the
Premises and access thereto to substantially the same condition as existing
immediately prior to such destruction, and this Lease shall continue in full
force and effect. Notwithstanding the foregoing, (i) Landlord's obligation to
rebuild, repair or restore the Premises shall not apply to any personal
property, tenant improvements or other items installed or contained in the
Premises which are not Building Standard Installations, and (ii) Landlord
shall have no obligation whatsoever to rebuild, repair or restore the Premises
with respect to any damage or destruction occurring during the last twelve
(12) months of the term of this Lease or the Extended Term.
(b)Landlord may elect to terminate this Lease in any of the following cases of
damage or destruction to the Premises, the Building or the Project: (i) where
the cost of rebuilding, repairing and restoring the Building or the Project
(collectively, "Restoration"), would, regardless of the lack of damage to the
Premises or access thereto, in the opinion of Landlord, exceed twenty percent
(20%) of the then-replacement cost of the Building; (ii) where, in the case of
any damage or destruction to any portion of the Building or the Project by
uninsured casualty, the cost of Restoration of the Building or the destruction
to any portion of the Building or the Project by uninsured casualty, the cost
of Restoration of the Building or the Project, in the opinion of Landlord,
exceeds Five Hundred Thousand Dollars ($500,000.00); or (iii) where, in the
case of any damage or destruction to the Premises or access thereto by
uninsured casualty, the cost of Restoration of the Premises or access thereto,
in the opinion of Landlord, exceeds twenty percent (20%) of the replacement
cost of the Premises. Any such termination shall be made by thirty (30) days'
prior written notice to Tenant given within sixty (60) days of the date of
such damage or destruction. If this Lease is not terminated by Landlord and
as the result of any damage or destruction, the Premises, or a portion
thereof, are rendered untenantable, and the Basic Annual Rent shall abate
rateably during the period of Restoration (based upon the extent to which such
damage and Restoration materially interfere with Tenant's business in the
Premises) unless such damage or destruction shall have resulted from the fault
or neglect of Tenant, its agents, servants, contractors, representatives,
employees, licensees or invitees. This Lease shall be considered an express
agreement governing any case of damage to or destruction of the Premises, the
Building or the Project. Tenant hereby waives the provisions of California
Civil Code Sections 1932(2) and 1933(4) and the provisions of any successor or
other law of like import.
10.EMINENT DOMAIN
In the event the whole of the Premises, the Building or the Project shall be
taken under the power of eminent domain, or sold to prevent the exercise
thereof (collectively, a "Taking"), this Lease shall automatically terminate
as of the date of such Taking. In the event of a Taking of such portion of
the Project, the Building or the Premises as shall, in the opinion of
Landlord, substantially interfere with Landlord's operation thereof, Landlord
may terminate this Lease upon thirty (30) days' written notice to tenant given
at any time within sixty (60) days following the date of such Taking. For
purposes of this Lease, the date of Taking shall be the earlier of the date of
transfer of title resulting from such Taking or the date of transfer of
possession resulting from such Taking. in the event that a portion of the
Premises is so taken and this Lease in not terminated, Landlord shall, with
reasonable diligence, proceed to restore (to the extent permitted by Law and
covenants, conditions and restrictions than applicable to the Project) the
Premises (other than Tenant's personal property and fixtures, and tenant
improvements not constituting Building Standard Installations) to a complete,
functioning unit. In such case, the Basic Annual Rent shall be reduced
proportionately based on the portion of the Premises so taken. If all or any
portion of the Premises is the subject of a temporary Taking, this Lease shall
remain in full force and effect, and Tenant shall continue to perform each of
its obligations under this Lease; in such case, Tenant shall be entitled to
receive the entire award allocable to the temporary Taking of the Premises.
Except as provided herein, Tenant shall not assert any claim against Landlord
or the condemning authority for, and hereby assigns to Landlord, any
compensation in connection with any such Taking, and Landlord shall be
entitled to receive the entire amount of any award therefor, without deduction
for any estate or interest of Tenant. Nothing contained in this Paragraph 10
shall be deemed to give Landlord any interest in, or prevent Tenant from
seeking any award against the condemning authority for the Taking of personal
property or fixtures of Tenant or for relocation or business interruption
expenses recoverable by Tenant from the condemning authority. This Paragraph
10 shall be Tenant's sole and exclusive remedy in the event of a Taking. Each
party hereby waives the provisions of Sections 1265.130 and 1265.150 of the
California Code of Civil Procedure and the provisions of any successor or
other law of like import.
11.ASSIGNMENT AND SUBLETTING
(a)Tenant shall not directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, assign, sublet, mortgage, hypothecate or
otherwise encumber all or any portion of its interest in this Lease or in the
Premises or grant any license in or suffer any person other than Tenant or its
employees to use or occupy the Premises, or any part thereof, without
obtaining the prior written consent of Landlord, which consent shall, subject
to Subparagraphs 11(d), (e), (f), and (g) below, not be unreasonably withheld.
Any such attempted assignment, subletting, license, mortgage, hypothecation,
other encumbrance or other use or occupancy without the consent of Landlord
shall be null and void and of no effect. For purposes of application of
Subparagraphs 11(b), (c), (d), (e), (f) and (g) below, any mortgage,
hypothecation or encumbrance of all or any portion of Tenant's interest in
this Lease or in the Premises and any grant of a license or sufferance of any
person other than Tenant or its employees to use or occupy the Premise, or any
part thereof, shall be deemed to be an "assignment" of this Lease. In
addition, as used in this Paragraph 11, the term "Tenant" shall also mean any
entity that has guaranteed Tenant's obligations under this Lease, and the
restrictions applicable to Tenant contained herein shall also be applicable to
such guarantor.
(b)No permitted assignment or subletting shall relieve Tenant of its
obligation to pay the Rent and to perform all of the other obligations to be
performed by Tenant hereunder. The acceptance of Rent by Landlord from any
other person shall not be deemed to be a waiver by Landlord of any provision
of this Lease or to be a consent to any subletting or assignment. Consent by
Landlord to one (1) subletting or assignment shall not be deemed to constitute
a consent to any other or subsequent attempted subletting or assignment.
(c)If Tenant desires at any time to assign this Lease or to sublet the
Premises, or any portion thereof, it shall first notify Landlord of its desire
to do so and shall submit in writing to Landlord (i) the name of the proposed
assignee or subtenant; (ii) the nature of the proposed assignee's or
subtenant's business to be carried on in the Premises; (iii) the terms and
provisions of the proposed assignment or sublease, which shall be expressly
subject to the provisions of this Lease; (iv) in the case of a sublease, the
portion of the Premises proposed to be sublet; and (v) such financial and
other information as Landlord may reasonably request concerning the proposed
assignee or subtenant.
(d)At any time within thirty (30) days after Landlord's receipt of the
information specified in Subparagraph 11(c) above, Landlord may, by written
notice to Tenant, elect (i) to sublease from Tenant the Premises or the
portion thereof so proposed to be subleased by Tenant, or to take an
assignment of Tenant's leasehold estate hereunder, or such part thereof as
shall be specified in said notice, upon the same terms as those offered to the
proposed subtenant or assignee, as the case may be, except that the Rent
payable by Landlord in the case of a sublease to Landlord shall be the same
Rent per square foot as is payable by Tenant hereunder for the same period; or
(ii) to terminate this Lease as to the portion of the Premises so proposed to
be subleased or assigned (which may include all of the Premises), with a
proportionate abatement in the Rent payable hereunder. In the case where
Landlord elects to sublease space, receive an assignment from Tenant or
terminate all or any portion of this Lease pursuant to this Subparagraph
11(d), Landlord may thereafter release the space affected to Tenant's proposed
assignee or subtenant, without liability to Tenant. If Landlord does not
exercise any option set forth in this Subparagraph 11(d) within said thirty
(30) day period, Tenant may, within ninety (90) days thereafter, into a valid
assignment or sublease of the Premises, or portion thereof, upon the terms and
conditions set forth in the information furnished by Tenant to Landlord
pursuant to Subparagraph 11(c) above, subject, however, in each instance, to
(i) Landlord's consent under Subparagraph 11(a) above, and (ii) Landlord's
receipt of a fully executed counterpart of such assignment or sublease. If
Landlord elects to exercise its option to sublet or receive an assignment from
Tenant (or terminate this Lease) as to any portion of the Premises, (i)
Landlord and its subtenants shall have the right to use in common with Tenant
all lavatories, corridors and lobbies within the Premises, the use of which is
reasonably required for the use of such sublet, assigned or terminated space,
and (ii) Tenant shall have no right of set off or right to assert a default
hereunder by reason of a default by Landlord under such sublease.
(e)Tenant acknowledges that it shall be reasonable for Landlord to withhold
its consent to a proposed assignment or sublease if (i) the use to be made of
the Premises by the proposed assignee or subtenant is (A) not generally
consistent with the character and nature of other tenants in the Building or
the Project or would result in a heavier burden (in comparison to that
resulting from tenant's use of such portion of the Premises) of the Building,
the project, the systems, the structures or the Common Areas thereof, (B) in
conflict with any "exclusive" or similar use or signage rights of another
Project tenant, or (C) prohibited by any provision of this Lease, including,
without limitation, the rules and regulations then in effect; (ii) the
character, moral stability, reputation or financial responsibility of the
proposed assignee or subtenant are not reasonably satisfactory to Landlord;
(iii) in the case of a proposed mortgage, hypothecation or other encumbrance
of Tenant's leasehold estate, (A) the proposed assignee or subtenant requests
relief from any provision of this Paragraph 11 or this Lease, including,
without limitation, those provisions requiring assumption of this Lease by
each assignee or subtenant and continuous occupancy of the Premises, (B) the
proposed mortgage, hypothecation or encumbrance is of less than the entire
leasehold estate, or (C) the proposed assignee or subtenant cannot reasonably
demonstrate to Landlord that such mortgage, hypothecation or encumbrance will
not impair or adversely affect any of Landlord's rights hereunder; (iv) in the
case of a sublease, (A) the portion of the Premises proposed to be sublet is
not a single, self-contained unit of space with access to restrooms and exits
in conformance with applicable Law or otherwise cannot be the subject of a
valid certificate of occupancy, or (B) the proposed transaction is a sublease
of a sublease hold interest; or (v) the proposed assignee or subtenant is an
existing tenant or subtenant in the Project.
(f)The voluntary or other surrender of this Lease by Tenant or a mutual
cancellation hereof shall not constitute a merger, and shall, at the option of
Landlord, either terminate all or any existing subleases or subtenancies or
shall operate as an assignment to Landlord of such subleases or subtenancies.
If Tenants a corporation which is not the issuer of any security registered
under Section 12(b) or Section 12(g) of the Securities Exchange Act of 1934,
or is an unincorporated association, trust or partnership in excess of twenty-
five percent (25%) in the aggregate during the term hereof of the total stock
or interest in such corporation, association, trust or partnership, the
transfer, assignment within the meaning of this Paragraph 11; provided,
however, that Landlord shall not withhold its consent and the provisions of
Subparagraphs (d) and (g) of this Paragraph 11 shall not apply to transactions
described in the foregoing sentence with a corporation (i) into or with which
Tenant is merged or consolidated, (ii) to which substantially all of Tenant's
assets are transferred, or (iii) that controls, is controlled by or is under
common control with Tenant so long as in each such case, (A) the successor of
Tenant has a net worth, calculated in accordance with generally-accepted
accounting principles (and evidenced by financial statements inform reasonably
satisfactory to Landlord) equal to the greater of the net worth of Tenant
immediately prior to such transaction or the net worth of the original Tenant
hereunder as of the date of this Lease, (B) all provisions of this Paragraph
11, other than Subparagraphs (d), (g) and the consent requirements of
Subparagraph (a), shall apply to such transactions, and (C) Tenant shall
present proof reasonably satisfactory to Landlord that the parties to the
transaction were not attempting to avoid the application of Subparagraphs (d)
and (g) of this Paragraph 11. If Tenant consists of more than one (1) person,
a purported transfer, assignment, mortgage, hypothecation or other
encumbrance, voluntary, involuntary or by operation of law, by any one of the
persons executing this Lease of all or part of such person's interest to this
Lease shall be deemed an assignment within the meaning of this Paragraph 11.
Each assignee, sublessee, licensee, mortgagee or other transferee, other than
Landlord, shall assume in a writing satisfactory to Landlord, all obligations
of Tenant under this Lease and shall be jointly and severally liable for the
performance of all of the provisions hereof. Notwithstanding the foregoing
and without prejudice to Landlord's right to require a written assumption from
each assignee, any person or entity to whom this Lease is assigned, including,
without limitation, assignees pursuant tot the provisions of the Bankruptcy
Code, 11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code"), shall
automatically be deemed to have assumed all obligations of Tenant arising under
this Lease. Tenant agrees to reimburse Landlord for Landlord's reasonable
costs and attorney's fees incurred in connection with the processing,
investigation and documentation of any requested assignment or sublease subject
to this Paragraph 11.
(g)If Landlord shall give its consent to any assignment of this Lease or to
any sublease of all or any portion of the Premises, Tenant shall pay to
Landlord as Additional Rent hereunder:
(i)In the case of an assignment, and amount equal to all sums and other
consideration paid to the assignor Tenant by the same assignee for, or by
reason of, such assignment, bud deducting from such sums and consideration,
all brokerage commissions actually paid to independent brokers in connection
with such transaction and pay tenant improvement allowance granted to the
assignee to the extent actually devoted exclusively to the installation of
leasehold improvements in the Premises (such commissions and allowance being
referred to herein as "Transaction Inducements"); and
(ii)In the case of a sublease, all sums, rents, additional charges, key money
and other consideration payable under the sublease by the subtenant to Tenant
in excess of Rent accruing during the term of the sublease with respect to the
subleased portion of the Premises (at the rate per square foot of Rentable
Area payable by Tenant). Tenant shall be entitled to deduct all Transaction
Inducements related to such sublease, provided the same are amortized over the
entire term of the sublease.
The obligation to make the payments described in this Subparagraph 11(g) shall
be a joint and several obligation of the Tenant and the assignee or subleasee,
as the case may be. The amounts payable under Subparagraph 11(g)(i) shall be
paid to Landlord on the effective date of the assignment, as a condition of
the effectiveness of Landlord's consent. The amounts payable under
Subparagraph 11(g)(ii) shall be paid to Landlord as and when payable by the
sublessee to Tenant. Within fifteen (15) days after written request therefor
by Landlord, Tenant shall furnish evidence to Landlord of the Amount of
consideration received or expected to be received from such assignment or
sublease.
(h)Notwithstanding any provision of this Lease to the contrary, in the event
this Lease is assigned to any person or entity pursuant to the provisions of
the Bankruptcy Code, any and all monies or other consideration payable or
otherwise to be delivered in connection with such assignment shall be paid or
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute the property of Tenant or Tenant's estate within the
meaning of the Bankruptcy Code. All such money and other consideration not
paid or delivered to Landlord shall be held in trust for the benefit of
Landlord and shall be promptly paid or delivered to Landlord.
12.DEFAULT
(a)The occurrence of any of the following shall constitute a material default
and breach of this Lease by Tenant (a "Tenant Default"):
(i)Any failure by Tenant to pay any installment of Basic Annual Rent or to
make any other payment required to be made by Tenant hereunder when due, where
such failure continues for five (5) days after delivery of written notice of
such failure by Landlord to Tenant; provided, however, that any such notice
shall be in lieu of, and not in addition to, any notice required under Section
1161 et seq., of the California Code of Civil Procedure;
(ii)The abandonment or vacation of the Premises by Tenant;
(iii)Any failure by Tenant to execute and deliver any statement described in
Paragraph 16 requested by Landlord, where such failure continues for five (5)
days after delivery of written notice of such failure by Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in
addition to, any notice required under Sections 1161 et seq., of the
California Code of Civil Procedure;
(iv)Any failure by Tenant to observe and perform any other provision of this
Lease, including, without limitation, any provision of the Exhibits attached
hereto, as they may exist from time to time, to be observed or performed by
Tenant, where such failure continues for thirty (30) days (except where a
different period of time is specified in this Lease, in which case, such
different time period shall apply) after delivery of written notice of such
failure by Landlord to Tenant; provided, however, that any such notice shall
be in lieu of, and not in addition to, any notice required under Sections 1161
et seq., of the California Code of Civil Procedures. If the nature of such
default is such that the same cannot reasonably be cured within such thirty
(30) day period, Tenant shall not be deemed to be in default if Tenant shall,
within ten (10) days of receipt of such notice, both deliver to Landlord its
written agreement to cure such default and commence such cure, and thereafter
diligently prosecute such cure to completion;
(v)The making or furnishing by Tenant of any warranty, representation or
statement to Landlord in connection with this Lease, or any other agreement to
which Tenant and Landlord are parties, which is false or misleading in any
material respect when made or furnished;
(vi)Any transfer of a substantial portion of the assets of Tenant, or any
occurrence of a material obligation by Tenant, unless such transfer or
obligation is undertaken or incurred in the ordinary course of Tenant's
business or in good faith or fair equivalent consideration, or with Landlord's
consent;
(vii)Any instance whereby Tenant or any general partner of Tenant shall cease
doing business as a going concern, make an assignment for the benefit of
creditors, generally not pay its debts as they become due or admit in writing
its inability to pay its debts as they become due, file a petition commencing
a voluntary case under any chapter of the Bankruptcy Code, be adjudicated an
insolvent, file a petition seeking for itself any reorganization, composition,
readjustment, liquidation, dissolution or similar arrangement under the
Bankruptcy Code or any other present or future similar statute, law, rule or
regulation, or file an answer admitting the material allegations of a petition
filed against it in any such proceeding, consent to the filing of such a
petition or acquiesce in the appointment of a trustee, receiver, custodian or
other similar official for it or of all or any substantial part of its assets
or properties, or take any action looking to its dissolution or liquidation;
(viii)Any instance whereby a case, proceeding or other action shall be
instituted against Tenant or any general partner of Tenant seeking the entry
of an order for relief against Tenant or any general partner thereof as
debtor, to adjudicate Tenant or any general partner thereof as a bankrupt or
insolvent, or seeking reorganization, arrangement, readjustment, liquidation,
dissolution or similar relief against Tenant or any general partner thereof
under the Bankruptcy Code or any other present or future similar statute, law,
rule or regulation, which case, proceeding or other action either results in
such entry, adjudication or issuance or entry of any other order or judgement
having a similar effect, or remains undismissed for sixty (60) days, or within
sixty (60) days after the appointment (without Tenant's or such general
partner's consent) of any trustee, receiver, custodian or other similar
official for it or such general partner, or for all or any substantial part of
its or such general partner's assets and properties, such appointment shall
not be vacated;
(ix)The appointment of a receiver, trustee or custodian to take possession of
all or any substantial portion of the assets of Tenant, or the formation of
any committee of Tenant's creditors, or any class thereof, for the purpose of
monitoring or investigating the financial affairs of Tenant or enforcing such
creditor's rights; or
(x)The default of any guarantor of Tenant's obligations hereunder under any
guaranty of this Lease, the attempted repudiation or revocation of any such
guaranty or the participation by any such guarantor in any other event
described in this Subparagraph 12(a) (as if this Subparagraph 12(a) referred
to such guarantor in place of Tenant).
(b)In the event of any such default by Tenant, then in addition to any other
remedies available to Landlord at law or in equity, Landlord shall have the
immediate option to terminate this Lease and all rights of tenant hereunder by
giving written notice of such termination. In the event that Landlord shall
elect to so terminate this Lease, then Landlord may recover from Tenant:
(i)The worth at the time of award of any unpaid Rent which had been earned at
the time of such termination; plus
(ii)The worth at the time of award of the amount by which the unpaid Rent for
the balance of the term after the time of award exceeds the amount of such
ental loss that Tenant proves reasonable could be avoided;
(iii)The worth at the time of award of the amount by which the unpaid Rent
which would have been earned after termination until the time of award exceeds
the amount of such rental loss Tenant proves reasonably could have been
avoided;
(iv)Any other amount necessary to compensate Landlord for all detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course would be likely to result therefrom; and
(v)At Landlord's election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable California Law.
(c)As used in Subparagraphs 12(b)(i) and 12(b)(ii) above, the "worth at the
time of award" is computed by allowing interest at the Default Rate specified
in Subparagraph 12(j) below. As used in Subparagraph 12(b)(iii) above, the
"worth at the time of award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).
(d)In the event of any such default by Tenant, Landlord shall also have the
right, with or without terminating this Lease, to re-enter the Premises and
remove all persons and property from the premises; such property may be
removed and stored in a public warehouse or elsewhere at the cost and risk of
and for the account of Tenant.
(e)In the event of the vacation or abandonment of the premises by Tenant or in
the event that Landlord shall elect to re-enter as provided in Subparagraph
12(d) or shall take possession of the Premises pursuant to legal proceedings,
or pursuant to any notice provided by Law, then if Landlord does not elect to
terminate this Lease as provided in this Paragraph 12, Landlord may from time
to time, without terminating this Lease, either recover all rentals as they
become due or relet the Premises, or any part thereof, for such term or terms
and at such rental or rentals and upon such other terms and conditions as
Landlord, in its sole and absolute discretion, may deem advisable, with the
right to make alterations and repairs to the Premises.
(f)In the event that Landlord shall elect to relet, then rentals received by
Landlord from such reletting shall be applied: first, to the payments of any
indebtedness (other than Rent) due hereunder from Tenant to Landlord; second,
to the payment of any cost of such reletting (including brokerage
commissions); third, to the payment of the cost of any alterations and repairs
to the Premises; fourth, to the payment of Rent due and unpaid hereunder and
the residue, if any, shall be held by Landlord and applied in payment of
future Rent as the same may become due and payable hereunder. Should
reletting, during any month to which such Rent is applied, result in the
actual payment of rentals at less than the Rent payable during that month by
Tenant hereunder, then Tenant shall pay such deficiency to Landlord
immediately upon demand therefor by Landlord. Such deficiency shall be
calculated and paid monthly. Tenant shall also pay to Landlord as soon as
ascertained, any costs and expenses incurred by Landlord in such reletting or
in making such alterations and repairs not covered by the rentals received
from such reletting.
(g)No re-entry or taking of possession of the Premises by Landlord pursuant to
this Paragraph 12 shall be construed as an election to terminate this Lease
unless a written notice of such election shall be given to Tenant or unless
the termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Landlord, Landlord, may
at any time after such reletting, elect to terminate this Lease for any such
default. Upon the occurrence of a default by Tenant under Subparagraph 12(a),
if the Premises, or any portion thereof, are sublet, Landlord in addition and
without prejudice to any other remedies herein provided or provided by Law,
may, at its option, collect directly from the sublessee all rentals becoming
due to the Tenant and apply such rentals against other sums due hereunder to
Landlord.
(h)In addition and without prejudice to any other right or remedy of Landlord,
if Tenant shall be in default under this Lease, Landlord may cure the same at
the cost and expense of Tenant (i) immediately and without notice in the case
(A) of emergency, (B) where such default unreasonably interferes with any
other tenant in the Project, or (C) where such default will result in the
violation of Law or the cancellation of any insurance policy maintained by
Landlord, and (ii) in any other case if such default continues for ten (10)
days from the receipt by Tenant of notice of such default from Landlord. All
costs incurred by Landlord in curing such default(s), including, without
limitation, attorneys' fees, shall be reimbursable by Tenant as additional
Rent hereunder upon demand, together with interest thereon, from the date such
costs were incurred by Landlord, at the rate specified in Subparagraph 12(i)
below.
(i)The performance by Landlord of any agreement, concession or grant for "free
rent," Rent abatement, a "credit fund" to be applied against Rent otherwise
payable hereunder or any grant or payment by Landlord to or for the benefit of
Tenant of any cash or other bonus, allowance or other payment or inducement or
any assumption of obligations by Landlord to or for the benefit of Tenant
given or granted to or for the benefit of Tenant as consideration for
execution and delivery of this Lease by Tenant (all such agreements,
concessions, grants, payments and assumptions are collectively referred to
herein as "Tenant Inducements") shall be continuously conditional upon
Tenant's full and complete performance of its obligations under this Lease, as
this Lease may be amended or extended. Effective immediately upon the
occurrence of a Tenant Default (A) any provision of this Lease provision of
this Lease providing for performance of a Tenant Inducement shall be
automatically deemed terminated and of no further force or effect and (B) any
Tenant Inducement previously granted, issued, paid or given to or for the
benefit of Tenant shall be immediately due and payable by Tenant to Landlord
as Rent hereunder.
(j)Tenant acknowledges and agrees that any late payment by Tenant of Rent or
any other amount payable by Tenant hereunder will result in damage to
Landlord, the exact amount of which will be extremely difficult to ascertain.
Such damage includes, without limitation, administrative expenses, accounting
and processing costs and late charges which may be payable by Landlord on
mortgage financing or other obligations of Landlord relating to the property.
As a result, Landlord and Tenant agree that in the event Tenant is more than
ten (10) days late in paying any amount of Rent or any other payment due under
this Lease, then without the need for any further notice to Tenant, Tenant
shall pay Landlord a late charge equal to five percent (5%) of the delinquent
amount. Landlord and Tenant agree that such late charge is a fair and
reasonable estimate of the damage Landlord will incur by reason of such
delinquent payment. Following the occurrence of three (3) instances of
payment of Rent more than ten (10) days late in any twelve (12) month period,
Landlord may, without prejudice to any other rights or remedies available to
it, upon written notice to Tenant, (i) require that all remaining monthly
installments of Rent shall be payable three (3) months in advance; and in
addition or in the alternative at Landlord's election, (ii) require that
Tenant increase the amount of the Security Deposit (if any) by an amount equal
to one (1) month's Rent. In addition, any amount due from Tenant to Landlord
hereunder which is not paid within thirty (30) days of the date due shall bear
interest at an annual rate (the "Default Rate") equal to four percent (4%) in
excess of the discount rate being charged by the Federal Reserve Bank of San
Francisco on advances to member banks pursuant to Sections 13 and 13(a) of the
Federal Reserve Act, as amended, as of the twenty-fifth (25th) day of the
month preceding the date hereof (or such lesser amount as shall be the maximum
rate then permitted by applicable use). The payment of such interest by
Tenant shall not constitute a waiver of any default by Tenant hereunder.
(k)Tenant hereby waives for Tenant and for all those claiming under Tenant all
rights now or hereafter existing to redeem by order or judgement of any court
or by any legal process or writ, Tenant's right of occupancy of the Premises
after any termination of this Lease. Notwithstanding any provision of this
Lease to the contrary, the expiration or termination of this Lease and/or the
termination of Tenant's rights to possession of the Premises shall not
discharge, relieve or release Tenant from any obligation or liability
whatsoever under any indemnity provision of this Lease, including, without
limitation, the provisions of Paragraphs 6 and 8 hereof.
13.ACCESS; CONSTRUCTION
Landlord reserves the right to use the roof and exterior walls of the Premises
and the area beneath, adjacent to and above the Premises, together with the
right to install, use, maintain, repair, replace and relocate equipment,
machinery, meters, pipes, ducts, plumbing, conduits and wiring through the
Premises, which serve other portions of the Building or the Project in a
manner and in locations which do not unreasonably interfere with Tenant's use
of the Premises. In addition, Landlord shall have free access to any and all
mechanical installations of Landlord or Tenant, including, without limitation,
machine rooms, telephone rooms and electrical closets. Tenant agrees that
there shall be no construction of partitions or other obstructions which
interfere with or which threaten to interfere with Landlord's free access
thereto, or interfere with the moving of Landlord's equipment to or from the
enclosures containing said installations. Landlord reserves and shall at any
time and all times have the right to enter the Premises to inspect the same,
to supply janitorial service and any other service to be provided by Landlord
to Tenant hereunder, to exhibit the Premises to prospective purchasers,
lenders or tenants, to post notices of nonresponsibility, to alter, improve,
restore, rebuild or repair the Premises, or any other portion of the Building,
or to do any other act permitted or contemplated to be done by Landlord
hereunder, all without being deemed guilty of an eviction of Tenant and
without liability for abatement of Rent or otherwise. For such purposes,
Landlord may also erect scaffolding and other necessary structures where
reasonably required by the character of the work to be performed. Landlord
shall conduct all such inspections and/or any injury or inconvenience to or
interference with the business of Tenant. Tenant hereby waives any claim for
damages for any injury or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned thereby. For each of such purposes, Landlord shall at
all times have and retain a key with which to unlock all of the doors in, upon
and about the Premises (excluding Tenant's vaults and safes, access to which
shall be provided by Tenant upon Landlord's reasonable request). Landlord
shall have the right to use any and all means which Landlord may deem proper
in an emergency in order to obtain entry to the Premises, or any portion
thereof. Any entry into the Premises obtained by Landlord by any of such
means shall not under any circumstances be construed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or any eviction of Tenant
from the Premises, or any portion thereof. No provision of this Lease shall
be construed as obligating Landlord to perform any repairs, Alterations or
decorations to the Premises or the Project except as otherwise expressly
agreed to be performed by Landlord pursuant to the provisions of this Lease.
14.BANKRUPTCY
(a)If at any time on or before the Commencement Date there shall be filed by
or against Tenant in any court, tribunal, administrative agency or any other
forum having jurisdiction, pursuant to any applicable law, either of the
United States or of any state, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver, trustee or conservator of
all or a portion of Tenant's property, or if Tenant makes an assignment for
the benefit of creditors, this Lease shall ipso facto be canceled and
terminated, and in such an event, neither Tenant nor any person claiming
through or under Tenant or by virtue of any applicable law or by an or der of
any court, tribunal, administrative agency or any other forum having
jurisdiction, shall be entitled to possession of the premises, and Landlord,
in addition to the other rights and remedies given by Paragraph 12 hereof or
by virtue of any other provision contained in this Lease or by virtue of any
applicable law, may retain as damages any Rent, Security Deposit or moneys
received by it from Tenant or others on behalf of Tenant.
(b)If, after the Commencement Date, or if at any time during the term of this
Lease, there shall be filed against Tenant in any court, tribunal,
administrative agency or any other forum having jurisdiction, pursuant to any
applicable law, either of the United States or of any state, a petition in
bankruptcy or insolvency or for reorganization or for the appointment of a
receiver, trustee or conservator of all or a portion of Tenant's property, and
the same is not dismissed after sixty (60) calendar days, or if Tenant makes
an assignment for the benefit of creditors, this Lease, at the option of
Landlord exercised within a reasonable time after notice of the happening of
any one or more of such events, may be canceled and terminated, and in such
event, neither Tenant nor any person claiming through or under tenant or by
virtue of any statute or of an order of any court shall be entitled to
possession or to remain in possession of the Premises, but shall forthwith
quit and surrender the Premises, and Landlord, in addition to the other rights
and remedies granted by Paragraph 12 hereof or by virtue of any other
provision contained in this Lease or by virtue of any applicable law, may
retain as damages any Rent, Security Deposit or moneys received by it from
Tenant or others on behalf of Tenant.
(c)In the event of the occurrence of any of those events in this Paragraph 14,
if the Landlord shall not choose to exercise, or by applicable law shall not
be able to exercise, its rights hereunder to terminate this Lease upon the
occurrence of such events, then, in addition to any other rights of Landlord
hereunder or by virtue of applicable law, (i) Landlord shall not be obligated
to provide Tenant with any of the utilities or services specified in Paragraph
7, unless Landlord has received compensation required with respect to such
services shall control, and (ii) neither Tenant, as debtor-in-possession, nor
any trustee or other person (hereinafter collectively referred to as the
"Assuming Tenant") shall be entitled to assume this Lease unless on or before
the date of such assumption, the Assuming Tenant (A) cures, or provides
adequate assurance that the latter will promptly cure, any existing default
under this Lease, (B) compensates, or provides adequate assurance that the
Assuming Tenant will promptly compensate Landlord for any pecuniary loss
(including, without limitation, attorneys' fees and disbursements) resulting
from such default, and (C) provides adequate assurance of future performance
under this Lease, it being covenanted and agreed by the parties that, for such
purposes, any cure or compensation shall be effected by the establishment of
an escrow fund for the amount at issue or by bonding, and (ii) "adequate
assurance" of future performance shall be effected by the establishment of an
escrow fund for the amount at issue or by bonding.
15.SUBSTITUTION OF PREMISES
Subject to the conditions specified in this Paragraph 15, Landlord reserves
the right without Tenant's consent, on thirty (30) days' written notice to
Tenant, to substitute other premises within the Building for the Premises. In
each such case, the substituted premises (a) shall contain at least the same
Rentable Area as the Premises, (b) shall contain comparable tenant
improvements, and (c) shall be made available to Tenant at the then-current
rental rate for such space, which in no event shall exceed the Rent specified
herein. Landlord shall pay all reasonable moving expenses of Tenant
incidental to such substitution of premises.
16.SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATES
(a)Tenant agrees that this Lease and the rights of Tenant hereunder shall be
subjected and subordinate to any and all deeds of trust, security interests,
mortgages, master leases, ground leases or other security documents and any
and all modifications, renewals, extensions, consolidations and replacements
thereof (collectively, "Security Documents") which now or hereafter constitute
a lien upon or affect the Project; the Building or the Premises. Such
subordination shall be effective without the necessity of the execution by
Tenant of any additional document for the purpose of evidencing or effecting
such subordination. In addition, Landlord shall have he right to subordinate
or cause to be subordinated any such Security Documents to this Lease, and in
such case, in the event of the termination or transfer of Landlord's estate or
interest in the Project by reason of any termination or foreclosure of any
such Security Documents, Tenant shall, notwithstanding such subordination,
attorn to and become the Tenant of the successor in interest to Landlord at
the option of such successor in interest. Furthermore, Tenant shall within
five (5) days of demand therefor execute any instruments or other documents
which may be required by Landlord or the holder of any Security Document and
specifically shall execute, acknowledge and deliver within five (5) days of
demand therefor a subordination of lease or subordination of deed of trust, in
the form required by the holder of the Security Document requesting the
document; the failure to do so by Tenant within such time period shall be a
material default hereunder. Landlord is hereby irrevocably appointed and
authorized as agent and attorney-in-fact of Tenant to execute and deliver all
such subordination instruments in the event that Tenant fails to execute and
deliver said instruments within five (5) days after notice from Landlord
requesting execution and delivery thereof. Notwithstanding any provision of
this Lease to the contrary, the subordination of this Lease (and Tenant's duty
hereunder to execute any documents evidencing such subordination) shall be
subject to the holder of such Security Document agreeing pursuant to such
holder's standard form for such purpose or otherwise pursuant to any other
form in common use by institutional lenders) that Tenant's possession and this
Lease shall not be disturbed by such holder so long as no default hereunder
shall occur, and Tenant shall attorn to the record owner of the Project.
(b)If any proceeding is brought for default under any ground or master lease
to which this Lease is subject or in the event of foreclosure or the exercise
of the power of sale under any mortgage, deed of trust or other Security
Document made by Landlord covering the Premises, at the election of such
ground lessor, master lessor or purchaser at foreclosure, Tenant shall attorn
to and recognize the same as Landlord under this Lease, provided such
successor expressly agrees in writing to be bound to all future obligations by
the terms of this Lease, and if so requested, Tenant shall enter into a new
lease with that successor on the same terms and conditions as are contained in
this Lease (for the unexpired term of this Lease then remaining); provided,
however, in no case shall such ground lessor, master lessor or purchaser (i)
be liable or responsible for any acts or omissions of any predecessor owner or
with respect to events prior to its ownership, (ii) be subject to any offsets
or defenses Tenant may have against any predecessor (iii) be bound by
prepayment of more than one (1) month's rent.
(c)Tenant shall, upon not less than five (5) days' prior notice by Landlord,
execute, acknowledge and deliver to Landlord a statement in writing certifying
to those facts for which certification has been requested by Landlord or any
current or prospective purchaser, holder of any Security Document, ground
lessor or master lessor, including, but without limitation, that (i) this
Lease is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and
stating the modifications), (ii) the dates to which the Basic Annual Rent,
Rent and other charges hereunder have been paid, if any, and (iii) whether or
not to the best knowledge of Tenant, Landlord is in default in the performance
of any covenant, agreement or condition contained in this Lease and, if so,
specifying each such default of which Tenant may have knowledge. The form of
the statement attached hereto as Exhibit "F" is hereby approved by Tenant for
use pursuant to this Subparagraph 16(c); however, at Landlord's option,
Landlord shall have the right to use other forms for such purpose. Tenant's
failure to execute and deliver such statement within such time shall, at the
option of Landlord, constitute a material default under this Lease and, in any
event, shall be conclusive upon tenant that this Lease is in full force and
effect without modification except as may be represented by Landlord in any
such certificate prepared by Landlord and delivered to Tenant for execution.
In addition, Landlord is hereby irrevocable appointed and authorized as agent
and attorney-in-fact of Tenant to execute and deliver such statement in the
event that Tenant fails to execute and deliver such statement within five (5)
days after notice from Landlord requesting execution and delivery thereof.
Any statement delivered pursuant to this Paragraph 16 may be relied upon by
any prospective purchaser of the fee of the Building or the Project or any
mortgagee, ground lessor or other like encumbrancer thereof or any assignee of
any such encumbrance upon the Building or the Project.
(d)In addition, and not in lieu of the foregoing, as a condition of Landlord's
obligation to deliver the Premises to Tenant hereunder, on or before the date
that Tenant takes possession or commences use of the Premises for any business
purpose (including moving in), Tenant shall execute and deliver to Landlord a
certificate substantially in the form of Exhibit "G" attached hereto,
indicating thereon any exceptions thereto which Tenant claims to exist at that
time.
17.SALE BY LANDLORD; NONRECOURSE LIABILITY
(a)In the event of a sale or conveyance by Landlord of the Building or the
Project, Landlord shall be released from any and all liability under this
Lease. If the Security Deposit has been made by Tenant prior to such sale or
conveyance, Landlord may transfer the Security Deposit to the purchaser, and
upon delivery to Tenant of notice thereof pursuant to the provisions of
Section 1950.7 of the California Civil Code, Landlord shall be discharged from
any further liability in reference thereto.
(b)Landlord and each of its officers, directors, Affiliates, shareholders and
constituent shareholders shall in no event or at any time be personally liable
for the payment or performance of any obligation required or permitted of the
Landlord under this Lease or under any document executed in connection
herewith. In the event of any actual or alleged failure, breach or default by
Landlord under this Lease or any such document, the sole recourse of Tenant
shall be against the interest of Landlord in the Project. No attachment,
execution, writ or other process shall be sought or obtained, and no judicial
proceeding shall be initiated by or on behalf of Tenant, against Landlord (or
any of Landlord's officers, directors, Affiliates or constituent partners or
shareholders) personally or Landlord's assets (other than Landlord's interest
in the Project) as a result of any such failure, breach or default.
(c)Landlord shall not be in default of any obligation or Landlord hereunder
unless and until it has failed to perform such obligation within thirty (30)
days after receipt of written notice of such failure from Tenant, provided,
however, that if the nature of Landlord's obligation is such that more than
thirty (30) days are required for its performance, Landlord shall not be in
default if Landlord commences to cure such default within the thirty (30) day
period and thereafter diligently prosecutes the same to completion. Tenant's
sole remedy for breach of this Lease by Landlord shall be an action for
damages, injunction or specific performance; Tenant shall have no right to
terminate this Lease on account of any breach or default by Landlord.
Notwithstanding any provision of this Lease, all liability of Landlord under
this Lease or otherwise with respect to any acts or omissions of Landlord or
events which occur during the term of this Lease and which in any way relate
to Tenant's tenancy hereunder or occupancy of the Premises shall terminate two
(2) years following the expiration or sooner termination of this Lease other
than as to those claims, if any, asserted in reasonable detail in a writing
delivered by Tenant to Landlord prior to the expiration of such tow (2) year
period.
(d)As a condition to the effectiveness of any notice of default given by
Tenant to Landlord, Tenant shall also concurrently give such notice under the
provisions of Subparagraph 17(c) to each beneficiary under a deed of trust
encumbering the Project of whom Tenant has received written notice (such
notice to specify the address of the beneficiary). In the event Landlord
shall fail to cure any breach or default within the time period specified in
Subparagraph 17(c), then prior to the pursuit of any remedy therefor by
Tenant, each such beneficiary shall have an additional thirty (30) days within
which to cure such default, or if such default cannot reasonable be cured
within such period, then each such beneficiary shall have such additional time
as shall be necessary to cure such default, provided that within such thirty
(30) day period, such beneficiary has commenced and is diligently pursuing the
remedies available to it which are necessary to cure such default (including,
without limitation, as appropriate, commencement of foreclosure proceedings).
18.PARKING; COMMON FACILITIES
(a)Tenant shall have the right to the nonexclusive use of the number of
parking spaces located in the parking facilities of the Project specified in
Item 13 of the Basic Lease Provisions for the parking of motor vehicles used
by Tenant, its officers and employees only. Landlord reserves the right, at
any time upon written notice to Tenant, to change the location of Tenant's
parking spaces within the parking facility originally designated for such use,
if any, as determined by Landlord in its reasonable discretion. The use of
such spaces shall be subject to the rules and regulations adopted by Landlord
from time to time for the use of such facilities. Landlord further reserves
the right to make such changes to the parking system as Landlord may deem
necessary or reasonable from time to time (i.e., Landlord may provide for one
or a combination of parking systems, including, without limitation, self-
parking, single- or double-stall parking spaces, and valet assist parking).
Tenant shall pay such amounts as may be charges by Landlord to Tenant for such
right of use from time to time, regardless of the degree of use. Tenant
agrees that Tenant, its officers and employees shall not be entitled to park
in any reserved or specially assigned areas designated by Landlord from time
to time in the Project's parking facilities. Landlord may require execution
of an agreement with respect to the use of such parking facilities by Tenant
and/or its offices and employees in form satisfactory to Landlord as a
condition of any such use by Tenant, its officers and employees shall not be
entitled to park in any reserved or specially assigned areas designated by
Landlord from time to time in the Project's parking facilities. Landlord may
require execution of an agreement with respect to the use of such parking
facilities by Tenant and/or its officers and employees in form satisfactory to
Landlord as a condition of any such use by Tenant hereunder. Tenant shall not
permit or allow any vehicles that belong to or are controlled by Tenant or
Tenant's offices, employees, suppliers, shippers, customers or invitees to be
loaded, unloaded or parked in areas other than those designated by Landlord
for such activities. If Tenant permits or allows any of the prohibited
activities described in this Paragraph 18, then Landlord shall have the right,
without notice, in addition to such other rights and remedies that it may
have, to remove or tow away the vehicle involved and charge the cost to
Tenant, which cost shall be immediately payable, upon demand by Landlord.
(b)Subject to Subparagraphs 18(a) and 18(c) hereof and the remaining
provisions of this Lease, Tenant shall have the nonexclusive right, in common
with others, to the use of the garage and such entrances, lobbies, restrooms,
elevators, ramps, drives, stairs, and similar access ways and service ways and
other common areas and facilities in and adjacent to the Building and the
Project as are designated from time to time by Landlord for the general
nonexclusive use of Landlord, Tenant and the other tenants of the Project and
their respective employees, agents, representatives, licensees and invitees
("Common Areas"). The use of such Common Areas shall be subject to the rules
and regulations contained herein and the provisions of any covenants,
conditions and restrictions affecting the Project. Landlord reserves the
right to make such changes, alterations, additions, deletions, improvements,
repairs or replacements in or to the Building, the Project (including the
Premises) and the Common Areas as Landlord may deem necessary or desirable,
including, without limitation, constructing new buildings and making changes
in the location, size, shape and number of driveways, entrances, parking
spaces, parking areas, loading areas, landscaped areas and walkways; provided,
however, that there shall be no unreasonable permanent obstruction of access
to or use of the Premises resulting therefrom. In the event that the Building
or the Project is not completed on the date of execution of this Lease,
Landlord shall have the sole judgement and discretion to determine the
architecture, design, appearance, construction, workmanship, materials and
equipment with respect to construction of the Building and the Project.
Notwithstanding any provision of this Lease to the contrary, the Common Areas
shall not in any event be deemed to be a portion of or included within the
Premises leased to Tenant, and the Premises shall not be deemed to be a
portion of the Common Areas.
(c)Landlord reserves the right (i) to change the configuration, size and
dimensions of the Project and its Common Areas, (ii) to add or sever from its
ownership any portion of the Project at any time, and (iii) to exclude from
the rights of use granted to Tenant any rights of passage over or use of any
portion of the Project.
19.MISCELLANEOUS
(a) Attorneys' Fees. In the event of any legal action or proceeding brought
by either party against the other arising out of this Lease, the prevailing
party shall be entitled to recover reasonable attorneys' fees and costs
incurred in such action. Such amounts shall be included in any judgement
rendered in any such action or proceeding.
(b)Waiver. No waiver by Landlord of any provision of this Lease or of any
breach by Tenant hereunder shall be deemed to be a waiver of any other
provision hereof, or of any subsequent breach by Tenant. Landlord's consent
to or approval of any act by Tenant requiring Landlord's consent or approval
under this Lease shall not be deemed to render unnecessary the obtaining of
Landlord's consent to or approval of any subsequent act of Tenant. No act or
thing done by Landlord or Landlord's agents during the term of this Lease
shall be deemed an acceptance of any Rent by Landlord following a breach of
this Lease by Tenant shall not constitute a waiver by Landlord of such breach
or any other breach unless such waiver is expressly stated in a writing signed
by Landlord.
(c)Notices. All notices which Landlord or Tenant may require, or may desire,
to serve on the other must be in writing and may be served by personal
service, or as an alternative to personal service, by mailing the same by
registered or certified mail, postage prepaid, addressed as set forth in Item
14 of the Basic Lease Provisions, or addressed to such other address or
addresses as either Landlord or Tenant may from time to time designate to the
other in writing. However, any notice (including a summons and complaint)
which Landlord may require or may desire to serve on Tenant shall be deemed
sufficiently served and given if personally served or sent by registered or
certified mail, postage prepaid, to Tenant at the Premises. In addition, any
bill, statement, consent or other communication which Landlord may desire or
is required to give to Tenant shall be deemed sufficiently given or rendered
if in writing, hand delivered to the Premises or sent to Tenant at the
Premises by registered or certified mail, postage prepaid.
(d)Labor. Tenant shall not at any time prior to or during the term hereof,
either directly or indirectly, use an contractors, labor or materials, the use
of which would create any difficulty with other contractors or labor engaged
by Tenant, Landlord or by others in the construction, maintenance or operation
of the Premises, the Building or the Project.
(e)Security. Landlord shall be the sole determinant of the type and amount of
security services, if any, to be provided to the Project. Presently, a card
key system provides after-hours (24 hour) entry to the Building and elevator
access to Tenant's floor. In all events, Landlord shall not be liable to
Tenant, and Tenant hereby waives any claim against Landlord, for, and
expressly assumes the risk of (i) any unauthorized or criminal entry of third
parties into the Premises, the Building or the Project, (ii) any damage to
persons, or (iii) any loss of property in and about the Premises, the Building
or the Project, by or from any unauthorized or criminal acts of third parties,
regardless of any action, inaction, failure, breakdown, malfunction and/or
insufficiency of the security services provided by Landlord, or any actual or
alleged passive or active negligence of Landlord.
(f)Storage. Storage is available at the perimeter of the Project on a "first-
come, first-served" basis. Any use of the storage space shall be at Tenant's
sole risk. Any storage space at any time demised to Tenant hereunder shall be
used exclusively for storage. Notwithstanding any other provision of this
Lease to the contrary, (i) Landlord shall have no obligation to provide,
heating, cleaning, water or air-conditioning therefor, and (ii) Landlord shall
be obligated to provide such storage space only such electricity as will, in
Landlord's judgement, be adequate to light said space as storage space. The
current rate charged by Landlord for the storage space is $.70 per square foot
per month.
(g)Holding Over. Tenant shall have no right to holdover or retain possession
of any portion of the Premises after the expiration or sooner termination of
this Lease. If Tenant holds over after the expiration or earlier termination
of the term hereof, with or without the express or implied consent of
Landlord. Tenant shall be come and be only a month-to-month tenant at a Rent
equal to the greater of (i) the then-prevailing market rate as determined by
Landlord, in its sole and absolute discretion (subject to adjustments as
provided in Paragraphs 2 and 3 hereof and prorated on a daily basis), or (ii)
one hundred fifty percent (150%) of the Basic Annual Rent payable by Tenant
immediately prior to such expiration or termination, and otherwise upon the
terms, covenants and conditions herein specified, so far as applicable.
Neither any provision hereof nor acceptance by Landlord of Rent after such
expiration or earlier termination shall be deemed a consent to a holdover
hereunder or result in a renewal of this Lease or an extension of the term.
Notwithstanding any provision to the contrary contained herein, (i) Landlord
expressly reserves the right to require Tenant to surrender possession of the
Premises upon the expiration of the term of this Lease or upon the earlier
termination hereof, the right to reenter the Premises, and the right to assert
any remedy at law or in equity to evict Tenant and/or collect damages in
connection with any such holding over, and (ii) Tenant shall indemnify, defend
and hold Landlord harmless from and against any and all claims, demands,
actions, losses, damages, obligations, costs and expenses, including, without
limitation, attorneys' fees incurred or suffered by Landlord by reason of
Tenant's failure to surrender the Premises on the expiration or earlier
termination of this Lease in accordance with the provisions of this Lease.
(h)Condition of Premises. Tenant acknowledges that neither Landlord nor any
agent o Landlord has made any representation or warranty with respect to the
Premises, the Building or the Project, or with respect to the suitability of
any part of the Premises by Tenant shall conclusively establish that the
Premises, the Building and the Project were at such time in good and sanitary
order, condition and repair and that he Tenant Work had been finally
completed, without defect and otherwise in accordance with the Tenant's Plans
(described in Work Letter).
(i)Quiet Possession. Upon Tenant's paying the Rent reserved hereunder and
observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the term hereof without hindrance or ejection
by any person lawfully claiming under Landlord, subject to the provisions of
this Lease and to the provisions of any (i) covenants, conditions and
restrictions, (ii) master lease, or (iii) deed of trust to which this Lease is
subordinate or may be subordinated.
(j)Matters of Record. Except as otherwise provided herein, this Lease and
Tenant's rights hereunder are subject and subordinate to all matters affecting
Landlord's title to the Project recorded in the official records of Orange
County, California, prior to and subsequent to the date hereof, including,
without limitation, all covenants, conditions and restrictions and the
provisions of all loan documents relating to each loan secured by a mortgage
or deed of trust encumbering the Project. Tenant agrees for itself and all
persons in possession or holding under it that it will comply with and not
violate any such covenants, conditions and restrictions affecting the
Premises, the Building or the Project, as long as such easements, rights,
dedications, maps, and covenants, conditions and restrictions do not
materially interfere with the use of the Premises by Tenant. At Landlord's
request, Tenant shall join in the execution of any of the aforementioned
documents.
(k)Project Financing. Tenant acknowledges that as a material inducement to
Landlord to execute this Lease, (i) Tenant shall timely acknowledge and
deliver to Landlord all such documents and instruments as may be customarily
those documents and instruments which may be required under Paragraph 16, and
(iii) if any prospective lender to Landlord shall request or require in
connection with the placement of any financing to Landlord or pursuant to the
provisions of any Security Document any modification of this Lease, Tenant
shall not delay or withhold its agreement to such proposed modification
provided in the same shall not modify the Basic Annual Rent payable hereunder
nor materially and adversely affect the obligations of Tenant hereunder.
Tenant shall be responsible for any and all liability, loss, cost, damage and
expense, including, without limitation, attorneys' fees, which Landlord shall
incur in connection with Tenant's failure or delay in executing, acknowledging
and delivering such documents and instrument or Tenant's breach of any other
covenant or agreement embodied in this Lease that results in the delay,
impairment or cancellation of such financing.
(l)Successors and Assigns. Except as otherwise provided in this Lease, all of
the covenants, conditions and provisions of this Lease shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns. Tenant shall attorn
to each purchase, successor or assignee of Landlord.
(m)Brokers. Tenant warrants that it has had no dealings with any real estate
broker or agent in connection with the negotiation of this Lease, excepting
only the broker named in Item 11 of the Basic Lease Provisions and that it
knows of no other real estate broker or agent who is or might be entitled to a
commission in connection with this Lease. Landlord covenants and agrees to
pay all real estate commissions due in connection with this Lease to the
broker described in Item 11 of the Basic Lease Provisions.
(n)Name. Tenant shall not, without the prior written consent of Landlord
(which shall not be unreasonably withheld), use the name, insignia or logotype
of the Building or the Project for any purpose, and in no event shall Tenant
acquire any rights in or to such names. Tenant shall not use any picture of
the Building or of the Project in its advertising, stationery or in any other
manner. Landlord expressly reserves the right at any time to change the name,
number, designation or logotype of the Building or the Project or the exterior
or interior signage thereon and therein without the consent of Tenant without
in any manner being liable to Tenant therefor.
(o)Examination of Lease, Confidentiality. Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option of release, and it is not effective as a lease or otherwise until
execution by and delivery to both Landlord and Tenant. Tenant agrees that (i)
the terms and provisions of this Lease are confidential and constitute
proprietary information of Landlord, and (ii) it shall not disclose, and it
shall cause its partners, officers, directors, shareholders, employees,
brokers and attorneys to not disclose any term or provision of this Lease to
any other person without first obtaining the prior written consent of
Landlord.
(p)Time. Time is of the essence of this Lease and each and all of its
provisions.
(q)Defined Terms and Marginal Headings. The words "Landlord" and "Tenant" as
used herein shall include the plural as well as the singular. If more than
one (1) person is named as Tenant, the obligations of such persons are joint
and several. The marginal headings and titles to the paragraphs of this Lease
are not a part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.
(r)Conflict of Laws; Prior Agreements; Separability. This Lease shall be
governed by and construed pursuant to the laws of the State of California.
This Lease contains all of the agreements of the parties hereto with respect
to any matter covered or mentioned in this Lease. No prior agreement,
understanding or representation pertaining to any such matter shall be
effective for any purpose. No provision of this Lease may be amended or added
to except by an agreement in writing signed by the parties hereto or their
respective successors in interest. The illegality, invalidity or
unenforceability of any provision of this Lease shall in no way impair or
invalidate any other provision of this Lease, and such remaining provisions
shall remain in full force and effect.
(s)Authority. If Tenant is a corporation, each individual executing this
Lease on behalf of Tenant hereby covenants and warrants that Tenant is a duly
authorized and existing corporation, that Tenant has and is qualified to do
business in California, that the corporation has full right and authority to
enter into this Lease, and that each person signing on behalf of the
corporation is authorized to do so. If Tenant is a partnership or trust, each
individual executing this Lease on behalf of Tenant hereby covenants and
warrants that he is duly authorized to execute and deliver this Lease on
behalf of Tenant in accordance with the terms of such entity's partnership or
trust agreement. Tenant shall provide Landlord on demand with such evidence
of such authority as Landlord shall reasonably request, including, without
limitation, resolutions, certificates and opinions of counsel.
(t)Common Areas. The rights of Tenant hereunder in and to the Common Areas
shall at all times be nonexclusive with the rights of Landlord and other
tenants of Landlord who use the same in common with Tenant, and it shall be
the duty of Tenant to keep all of the Common Areas free and clear of any
obstructions created or permitted by Tenant or resulting from Tenant's
operations, and to use the Common Areas only for normal activities, parking
and ingress and egress by Tenant and its employees, agents, representatives,
licensees and invitees to and from the Premises, the Building or the Project.
If, in the opinion of Landlord, unauthorized persons are using the Common
Areas by reason of the presence of Tenant in the Premises, Tenant, upon demand
of Landlord, shall correct such situation by appropriate action or proceedings
against all such unauthorized persons. Nothing herein shall affect the rights
of Landlord at any time to remove any such unauthorized persons from said
areas or to prevent the use of any said areas by unauthorized persons.
(u)Joint and Several Liability. If two (2) or more individuals, corporations,
partnerships or other business associations (or any combination of two (2) or
more thereof) shall sign this Lease ans Tenant, the liability of each such
individual, corporation, partnership or other business association to pay Rent
and perform all other obligations hereunder shall be deemed to be joint and
several, and all notices, payments and agreements given or made by, with or to
any one of such individuals, corporations, partnerships or other business
associations shall be deemed to have been given or made by, with or to all of
the. In like manner, if Tenant shall be a partnership or other business
association, the members of which are, by virtue of statute or federal law,
subject to personal liability, then the liability of each such member shall be
joint and several.
(v)Rental Allocation. For purposes of Section 467 of the Internal Revenue
Code of 1986, as amended from time to time, Landlord and Tenant hereby agree
to allocate all Rent to the period in which payment is due, or if later, the
period in which Rent is paid.
(w)Rules and Regulations. Tenant agrees to comply with all rules and
regulations of the Building and the Project imposed by Landlord as set forth
on Exhibit "D" attached hereto, as the same may be changed from time to time
upon reasonable notice to Tenant. Landlord shall not be liable to Tenant for
the failure of any other tenant or any of its assignees, subtenants, or their
respective agents, employees, representatives, invitees or licensees to
conform to such rules and regulations.
(x)Financial Statements. Upon Landlord's written request, Tenant shall
promptly furnish Landlord, from time to time, with the next current audited
financial statements prepared in accordance with generally-accepted accounting
principles, certified by Tenant and an independent auditor to be true and
correct, reflecting Tenant's then-current financial condition.
(y)Landlord's Agent. All rent and other payments, and any notices required
under this Lease to be given to Landlord, shall be paid or delivered, as the
case may be, to Landlord's Agent. Landlord reserves the right, at any time
and from time to time, to change Landlord's Agent or to direct Tenant to pay
rent and other sums due hereunder and/or to deliver notices directly to
Landlord, which instruction shall become effective immediately upon delivery
to Tenant of a written notice thereof.
20.ADDENDA
The provisions of this Paragraph 20 shall supersede and override any other
provision of this Lease to the extent the same are inconsistent:
(a)Transportation Management. Tenant shall fully comply with all present or
future programs intended to manage parking, transportation or traffic in and
around the Building, and in connection therewith, Tenant shall take
responsible action for the transportation planning and management of all
employees located at the Premises by working directly with Landlord, any
governmental transportation management organization or any other
transportation-related committees or entities.
(b)Non-smoking. The building is a non-smoking building. Tenant agrees to use
its commercially reasonable efforts to cooperate with Landlord in enforcing
non-smoking areas for Tenant's employees outside and away from the Building.
AMENDMENT NO. 1 TO OFFICE LEASE
THIS AMENDMENT NO. 1 TO OFFICE LEASE ("Amendment") is made and entered
into on March, 1997, by and between NL-ORANGE, L.P., A California Limited
Partnership ("Landlord"), and DENNIS SHEN, doing business as GLOBAL PAC TECH
("Tenant").
RECITALS
A. Landlord and Tenant are parties to that certain Office Lease, dated
October 28, 1996 ("hereafter referred to as the "Lease"), pursuant to which
Tenant leases from Landlord the premises commonly known as Suite 3400
(hereafter referred to as the "Original Premises"), consisting of
approximately 1,732 square feet of Rentable Area on the third floor in the
office building located at 770 The City Drive South, Orange, California 92868
(hereafter referred to as the "770 Building").
B. Tenant desires to expand the Original Premises by the addition of
approximately 660 square feet of Rentable Area located contiguous to the
Original Premises (hereafter referred to as the "Expansion Premises"). For
purposes of this Amendment, the term "Premises" shall mean and include the
Original Premises and the Expansion Premises.
C. The parties hereto desire to amend the Lease to include the Expansion
Premises and to extend the term, all upon the terms and subject to the
conditions set forth in this Amendment.
D. All capitalized terms used in this Agreement which are defined in the
Lease shall have the same meaning herein as in the Lease.
TERMS AND CONDITIONS
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. Expansion Premises. Landlord and Tenant hereby agree to add the
Expansion Premises to the Original Premises and to make it part of the Lease
upon the terms and subject to the conditions set forth in this Amendment. The
Commencement Date for the addition of the Expansion Premises is July 1, 1997.
<PAGE>
2. Rentable Area. From and after July 1, 1997, the Rentable Area of the
Premises, subject to any adjustments required by the Lease or Exhibit A-4,
shall be 2,392 square feet.
3. Tenant's Proportionate Share of Excess Operating Costs. From and after
the July 1, 1997, Tenant's Proportionate Share of Excess Operating Costs for
the Premises shall be .6439% (assuming that the Rentable Area of the Premises
is as set forth in Section 2 above).
4. Basic Annual Rent: Monthly Installment. From and after July 1, 1997,
the Basic Annual Rent for the Expansion Premises shall be $11,404.80, (based
on $1.44 per square foot of Rentable Area), the monthly installment of the
Basic Annual Rent shall be $950.40, and the per them amount for a partial
lease month shall be $31.25.
5. Term. The term of the Lease with respect to the Expansion Premises,
shall be coterminous with the term with respect to the Original Premises.
6. Security Deposit. The amount of the Security Deposit originally
delivered by Tenant to Landlord with respect to its lease of Suite 4200 in the
770 Building was $4,507.08. The security deposit is to be increased to
$6,407.88 upon execution of this Amendment and increased to $6,819.68
effective August 1, 1997.
7. Early Occupancy. As soon as the work to the Expansion Premises
described in Section 8 is completed, Landlord may make the Expansion Premises
available to Tenant for early occupancy; provided, however, that prior thereto
Tenant provides Landlord with an amended or updated certificate of insurance
evidencing that all required insurance coverages under the Lease are in place
with respect to the Expansion Premises. Tenant may occupy the Expansion
Premises from the date of early possession through June 30, 1997 on a rentfree
basis.
8. Landlord's Obligations Regarding Expansion Premises. Landlord's sole
obligation to Tenant is to remove one wall as shown on Exhibit 1 attached
hereto and incorporated herein by this reference, and to install, repair or
replace the building standard carpet as Landlord determines in its sole and
absolute discretion. Except and only to the extent of the work described in
this Section 8, Landlord has not made any other commitments or promises to
Tenant which would obligate Landlord to pay or reimburse Tenant for any costs
associated with the Expansion Premises or the improvement thereof.
<PAGE>
2
9. No Other Changes. Except for the terms specifically set forth in this
Amendment, there are no other changes or modifications to the Lease and all
provisions of the Lease shall be applicable to the Expansion Premises, and the
Lease, as amended by this Amendment, shall remain in full force and effect.
NOW, THEREFORE, the parties hereto have executed this Amendment on the
date first above mentioned.
NL-ORANGE, L.P., A CALIFORNIA
LIMITED PARTNERSHIP
By: Nippon Landic (U.S.A.), Inc., a /s/ D Shen
Delaware corporation, as DENNIS SHEN, doing
General Partner business as GLOBAL PAC TECH
By:
Mitsuhiko Hashimoto
General Manager
<PAGE>
Exhibit 1
<Composite Drawing
Floor Three appear here>
AMENDMENT NO. 2 TO OFFICE LEASE
THIS AMENDMENT NO. 2 TO OFFICE LEASE ("Amendment") is made and entered
into as of November 6, 1997, by and between NL-Orange, L.P., a California
Limited Partnership, by Nippon Landic (U.S.A.), Inc. a Delaware corporation,
as General Partner ("Landlord"), and DENNIS SHEN, doing business as GLOBAL PAC
TECH ("Tenant").
RECITALS
A. Landlord and Tenant are parties to that certain Office Lease, dated
October 28, 1996, as amended by Amendment No. 1 to Office Lease dated May 1,
1997 (collectively the "Lease") with respect to those certain premises
described in the Lease and more commonly known as Suite 3400 at 770 The City
Drive South, Orange, California ("Premises").
WHEREAS, Tenant desires to lease from Landlord and Landlord desires to
lease to Tenant that portion of the roof ("Roof') shown as diagonally lined on
the diagram attached as Exhibit "A" ("Antenna Area").
NOW, THEREFORE, in consideration of the mutual promises hereinafter made
and for other good and valuable consideration, the receipt, sufficiency and
adequacy of which are acknowledged, the parties hereto, intending to be
legally bound, do hereby modify, amend and/or supplement the Lease as to the
provisions only as hereinafter stated, and only as to the Antenna Area as
described in this Amendment and Exhibit "A" attached hereto.
1. Roof Rights. Tenant shall be granted the right to install one (1)
antenna in the Antenna Area at Tenant's expense and subject to appropriate
governmental approval and Landlord's reasonable approval. Prior to
installation of the antenna, Tenant shall submit to Landlord all plans,
specifications and drawings. Tenant shall be responsible for the installation,
maintenance and operation and liability of the antenna.
a) Landlord agrees that during the Term (as defined in Section 3
below), Tenant may install, use and have maintained in the Antenna Area,
equipment ("Equipment") as specifically described in documentation delivered
by Tenant to Landlord in connection with the initial approval process. All of
Tenant's construction and installation work shall be performed at Tenant's
sole cost and expense and in good and work-manlike manner. Tenant shall have
and retain whatever title and rights to the Equipment as it has or claims to
have, exclusive of space in and structural portions of the buildings, which
belong to and shall be retained by Landlord. Landlord will
<PAGE> 1
cooperate with Tenant, at no cost to Landlord, regarding Tenant's access to
utilities and the connection of the utilities to the Equipment
b) Landlord agrees that Tenant and/or its contractor may run
cables ("Cables") between the Antenna Area and Premises, only in locations
specifically approved by Landlord in writing, which approval shall not be
unreasonably delayed or withheld.
c) The Equipment and Cables shall remain the property of Tenant or
its contractor during the Term. Tenant shall, at its sole cost and expense
within fourteen (14) days, remove or have removed such Equipment and Cables
upon the earlier of (1) the expiration or termination of this Agreement, or
(ii) the expiration of the Lease. To the extent reasonably possible, Tenant
shall restore Landlord's affected facilities to their original condition,
including repainting or touch-up, excepting ordinary wear and tear, and/or
damage or destruction due to fire or other casualty.
d) Tenant shall bear all expense in connection with the
installation, use and maintenance of such Equipment and Cables, and shall be
solely responsible for all maintenance, repair and damage caused to the Roof
or roof membrane as a result of the installation or any access to the antenna.
Tenant shall indemnify, defend, protect and hold Landlord harmless from and
against liability, damages, costs and expenses, including reasonable
attorneys' fees incurred or suffered by Landlord directly caused by Tenant's
installation, use and maintenance of the Equipment and Cables, including
without limitation, injury and death to persons, damage to property and
interference with other tenants and licensee's rights who are sharing roof-top
facilities at the Project.
e) Tenant shall maintain in force and effect during the Term,
comprehensive liability insurance protecting Landlord against any liability,
damages costs or expenses, in connection with the installation, use and
maintenance of the Equipment and Cables, and shall supply to Landlord, upon
Landlord's written request, the appropriate certificates of such insurance.
f) Tenant and its contractors shall comply with all applicable
laws, regulations and building codes in connection with the installation, use
and maintenance of the Equipment and Cables.
2. Tests and Construction. Tenant shall have the right at any time
following the full execution of this Amendment to enter upon the Project and
the Building for the purpose of making necessary engineering surveys,
inspections, radio tests and other reasonably necessary tests ("Tests")
Tenant's right to conduct tests shall be subject to Paragraph 6 of the
Amendment. Tenant shall coordinate with Landlord's building manager and/or
Landlord's security personnel for access to the Roof. Tenant shall not access
the Roof without Landlord's prior approval, except in the case of a general
emergency or disaster.
<PAGE>
Tenant shall also coordinate its construction schedule with Landlord to comply
with Landlord's Rule and Regulations.
3. Term. The term of the Lease with respect to the Antenna Area shall
commence upon full execution of this Amendment and shall be coterminous with
the Lease (as extended or renewed) subject to earlier termination as provided
in Section 9 below. Tenant shall have no right to use the Antenna Area beyond
the expiration or termination of the Lease.
4. Rent. Upon full execution of this Amendment, and on the first day of
each month thereafter during the Term, Tenant shall pay to Landlord as rent
for the Antenna Area, Two Hundred Fifty and 00/100 Dollars ($250.00) per month
("Rent").
5. Access and Utilities. Landlord shall permit Tenant and/or its
contractors reasonable access to the Antenna Area and other areas so as to
facilitate the installation, use and maintenance of the Equipment and Cables,
and the removal of the Equipment and Cables, pursuant to the terms of the
Lease.
Following installation of the Equipment and Cables, Tenant, Tenant's
employees, agents and subcontractors shall have access to the Antenna Area
twenty-four (24) hours a day, seven (7) days a week, at no charge and shall at
all times provide Landlord and/or Landlord's security personnel with proper
identification and authorization from Tenant. Tenant shall coordinate with
Landlord's building manager and/or Landlord's security personnel for access to
the Roof. Tenant shall not access the Roof without Landlord's prior
notification, except in the case of a general emergency or disaster.
Tenant shall pay for the electricity it consumes in its operation of the
Equipment and Cables at the rate charged by the servicing utility company.
Landlord reserves the right to require Tenant to install a submeter to monitor
and verify utility usage. Tenant shall pay all taxes, surcharges and other
fees included as part of the electrical bill and which is allocable to
Tenant's usage.
6. Interference. Tenant shall operate the Equipment in a manner that will
not cause interference to Landlord and other Tenants or licensees of the
Property, provided that their installations predate that of this Amendment. In
the event the equipment of any future user of the Roof causes interference to
Tenant's Equipment, Landlord shall require such user to cease such
transmission until such interference can be eliminated. All operations by
Tenant shall be in compliance with all Federal Communications Commission
("FCC") requirements.
7. Taxes. If personal property taxes are assessed, Tenant shall pay any
portion of such taxes directly attributable to the Equipment and Cables.
<PAGE> 3
8. Waiver of Landlord's Lien. Landlord waives any lien rights it may have
concerning the Equipment which are deemed Tenant's personal property and not
fixtures, and Tenant has the right to remove the same at any time without
Landlord's consent, provided Tenant complies with its obligations under
Section Inc) above.
9. Termination. This Amendment may be terminated without further
liability on thirty (30) days prior written notice as follows: (i) by either
party upon a default of any covenant or term hereof by the other party, which
default is not cured within thirty (30) days of receipt of written notice of
default, provided that the grace period for any monetary default is ten (10)
days from receipt of notice; or (ii) by Tenant if it does not obtain or
maintain any license, permit or other approval necessary for the construction
and operation of Equipment and Cables.
Tenant's obligation to remove the Equipment and to indemnify Landlord
shall survive termination.
10. No Other Changes. Except as set forth in this Amendment, there are no
other changes or modifications to the Lease, and the Lease as so amended shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above mentioned.
NL-ORANGE, L.P., a California limited partnership
By: Nippon Landic (U.S.A.), Inc., By: /s/ D. Shen
a Delaware corporation, Dennis Shen, doing business as
as General Partner GLOBAL PAC TECH
By: /s/ Mitsuhiko Hashimoto
Mitsuhiko Hashimoto
General Manager
<PAGE>
Exhibit A
<Map of Antenna Area appears here>
AMENDMENT NO. 3 TO OFFICE LEASE
THIS AMENDMENT NO. 3 TO OFFICE LEASE ("Amendment") is made and entered
into on November 12, 1998, by and between NL-ORANGE, L.P., A California
Limited Partnership ("Landlord"), and DENNIS SHEN, doing business as GLOBAL
PAC TECH ("Tenant").
RECITALS
A. Landlord and Tenant are parties to that certain Office Lease, dated
October 28, 1996 (hereafter referred to as the "Original Lease"), pursuant to
which Tenant leased from Landlord the premises commonly known as Suite 3400
(hereafter referred to as the "Original Premises"), consisting of
approximately 1,732 square feet of Rentable Area on the third floor in the
office building located at 770 The City Drive South, Orange, California 92868
(hereafter referred to as the "770 Building"). The Original Lease was amended
by that certain Amendment No. I to Office Lease, dated May 1, 1997 ("Amendment
No. 1"), pursuant to which, among other things, the Original Premises were
expanded by approximately 660 square feet of Rentable Area by the inclusion of
the Expansion Premises. The Original Lease was further amended by that certain
Amendment No. 2 to Office Lease, dated November 6, 1997, pursuant to which
among, other things, Tenant was granted certain rights to Install an antenna
on the rooftop of the 770 Building. The Original Lease, Amendment No. 1 and
Amendment No. 2 are hereafter collectively referred to as the "Lease."
B. The parties hereto desire to amend the Lease to cancel Amendment No. 1
and to exclude the Expansion Premises, all upon the terms and subject to the
conditions set forth in this Amendment.
C. All capitalized terms used in this Amendment which are defined in the
Lease shall have the same meaning herein as in the Lease.
TERMS AND CONDITIONS
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1 . Cancellation of Amendment No. 1. Subject to the terms and conditions
set forth in this Amendment, Amendment No. 1 is canceled effective as of
December 15, 1998 (the "Effective Date"). As of the Effective Date. and
assuming compliance with all of the
<PAGE>
terms and conditions set forth in this Amendment, the term Premises, as used
in the Lease. shall mean and refer to only the Original Premises. Amendment
No. 2 shall remain in full force and effect.
2. Condition of Expansion Premises. On or before the Effective Date,
Tenant shall deliver and surrender the Expansion Premises to Landlord broom
clean, free of any damage except for reasonable wear and tear not in violation
of the Lease.
3. Partial Refund of Security Deposit. Pursuant to the Lease, Tenant has
delivered to Landlord the sum of $6,819.68 as a Security Deposit. As a result
of the reduction in Rentable Area of the Premises, and the reduction in the
monthly installment of the Basic Annual Rent, Tenant is entitled to a partial
refund of the Security Deposit upon the terms and conditions set forth in this
Section 3. As soon after the Effective Date as Landlord is reasonably able to
confirm that Tenant has compiled with the conditions precedent to the
Cancellation of Amendment No. 1, the Security Deposit shall be reduced to
$4,918.88 and Landlord shall immediately thereafter refund to Tenant the sum
of $1,900.80, representing the difference between the amount of the Security
Deposit held by Landlord and the revised amount of the Security Deposit as
determined in this Section 3.
4. Construction of Demising Wall. Landlord, at its sole cost and expense,
shall construct a demising wall between Suite 3400 and Suite 3550, as shown on
Exhibit A attached hereto and incorporated herein by this reference. The
purpose of the demising wall is to separate the Expansion Premises from the
Original Premises.
5. Original Lease Terms. As of the Effective Date, and assuming
compliance with all of the terms and conditions set forth in this Amendment,
the Rentable Area, Tenant's Proportionate Share of Excess Operating Costs for
the Premises, the Basic Annual Rent and the monthly installment of the Basic
Annual Rent shall be as set forth in the Original Lease, as if Amendment No. I
had never been enacted; provided. however, Tenant shall also remain liable to
pay the additional Rent specified in Amendment No. 2.
6. Conditions Precedent. In addition to any other terms or conditions set
forth in this Amendment, Landlord's obligations hereunder are conditioned upon
Tenant's compliance with all terms of the Lease up to and including the
Effective Date, and Tenant is and shall remain obligated to pay the Basic
Annual Rent and Tenant's Proportionate Share of Excess Operating Costs with
respect to the Expansion Premises through the Effective Date.
7. No Other Changes Except for the terms specifically set forth in this
Amendment, there are no other changes or modifications to the Lease and all
provisions of the Lease, as amended by this Amendment, shall remain in full
force and effect.
<PAGE> 2
NOW, THEREFORE, the parties hereto have executed this Amendment on the
date first above mentioned.
NL-ORANGE, L.P., A CALIFORNIA
LIMITED PARTNERSHIP
By: Nippon Landic (U.S.A.), Inc., a /s/ Dennis Shen
Delaware corporation, as DENNIS SHEN, doing
General Partner business as GLOBAL PAC TECH
By: /s/ Mitsuhiko Hashimoto
Mitsuhiko Hashimoto
General Manager
<PAGE>
Exhibit A
<Composite Drawing appears here>
RELOCATION AND LEASE TERMINATION AGREEMENT
THIS RELOCATION AND LEASE TERMINATION AGREEMENT("Agreement") is made and
entered into as of October 28, 1996, by and between NL-ORANGE, L.P., a
California Limited Partnership ("Landlord"), and DENNIS SHEN, doing business
as Global Pac Tech ("Tenant").
RECITALS
A. Landlord and Tenant are parties to that certain Office Lease, dated
July 15, 1996 (hereafter referred to as the "Original Lease"), pursuant to
which Tenant leases from Landlord the premises commonly known as Suite 2200
(hereafter referred to as the "Original Premises"), consisting of
approximately 1,587 square feet of Rentable Area on the second floor in the
office building located at 770 The City Drive South, Orange. California 92868
(hereafter referred to as the "770 Building").
B. Landlord and Tenant have agreed to relocate Tenant from the Original
Premise into Suite 3400 (hereafter referred to as the "New Premises"),
consisting of approximately 1,732 square feet of Rentable Area on the third
floor in the 770 Building and, in connection with the relocation, Landlord and
Tenant have mutually agreed to terminate the Original Lease and to enter into
a new Office Lease (hereafter referred to as the "New Lease") upon the terms
and subject to the conditions set forth in this Agreement.
C. All capitalized terms used in this Agreement will have the same
meaning as defined in the Original Lease unless the context specifically
requires other-wise.
TERMS AND CONDITIONS
NOW, THEREFORE, for good and sufficient consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. Agreement to Relocate. Tenant hereby agrees to relocate from the
Original Premises to the New Premises. The Target Commencement Date for the
New Lease is December 1, 1996. Tenant agrees to completely vacate the Original
Premises, including removal of all of its furniture, furnishings, equipment
and personal property, no later than three (3) days following written notice
from Landlord that the New Premises is substantially completed, subject only
to minor punch list items.
<PAGE>
2. Agreement to Execute New Lease. Concurrently with the execution of
this Agreement, and as a material inducement to each other party to sign this
Agreement, Landlord and Tenant shall execute the New Lease with respect to the
lease by Landlord to Tenant of the New Premises. The Security Deposit
delivered by Tenant to Landlord pursuant to the Original Lease shall be
transferred over and held by Landlord as the Security Deposit under the New
Lease.
3. Termination of Original Lease. Effective as of the Commencement Date
of the New Lease, the Original Lease shall terminate. The Original Lease shall
remain in full force and effect up to the termination of the Original Lease,
all obligations of Landlord and Tenant thereunder shall remain in full force
and effect until such termination
4. Moving and Relocation Costs. Landlord agrees to improve and construct
the Tenant Improvements for the New Premises in accordance with the terms of
the Work Letter Agreement attached as Exhibit B to the New Lease. Except and
only to the extent of Landlord's obligation in the Work Letter Agreement,
Landlord has not made any other commitments or promises to Tenant which would
obligate Landlord to pay or reimburse Tenant for any costs of Tenant's move
from the Original Premises and relocation into the New Premises.
5. Entire Agreement; Amendment. This Agreement, and the documents
referred to herein, contain the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any prior or
contemporaneous written or verbal agreement. This Agreement may only be
amended or supplemented by a written document signed by both of the parties
hereto.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of
the date first above mentioned.
NL-ORANGE, a California Limited
Partnership
By: Nippon Landic (U.S.A.), Inc., /S/ D. Shen
General Partner DENNIS SHEN, doing business as
GLOBAL PAC TECH
By /s/ Mitsuhiko Hashimoto
Mitsuhiko Hashimoto
General Manager
<Letterhead of Columbia Financial Group appears here
1301 York Road, Suite 400, Lutherville, MD 21093
Tel: (410) 321-1799 Fax: (410) 321)-1753, 888-301-6271
www.cfgstocks.com>
CONSULTANT AGREEMENT
Columbia Financial Group is an investor relations, direct marketing,
publishing, public relations and advertising firm with expertise in the
dissemination of information about publicly traded companies. Also in the
business of providing investor relations services, public relations services,
publishing, advertising services, fulfillment services, as well as internet
related services.
Agreement made this 1st day of June, 1999, between Worldwide Wireless
Network, Inc.(hereinafter referred to as "Corporation"), and Columbia
Financial Group, Inc. (hereinafter referred to as "Consultant"), (collectively
referred to as the "Parties"):
Recitals:
The Corporation desires to engage the services of the Consultant to
perform for the Corporation consulting services regarding all phases of the
Corporation's "Investor Relations" to include direct investor relations and
broker/dealer relations as such may pertain to the operation of the
Corporation's business.
The Consultant desires to consult with the Board of Directors, the
Officers of the Corporation, and certain administrative staff members of the
Corporation, and to undertake for the Corporation consultation as to the
company's investor relations activities involving corporate relations and
relationships with various broker/dealers involved in the regulated securities
industry.
AGREEMENT
1. The respective duties and obligation of the contracting parties
shall be for a period of twelve (12) months commencing on the date first
appearing above. This Agreement may be terminated by either parties only in
accordance with the terms and conditions set forth in Paragraph 7.
Services Provided by Consultant
2. Consultant will provide consulting services in connection with the
Corporation's "investor relations" dealings with NASD broker/dealer and the
investing public. (At no time shall the Consultant provide services which
would require consultant to be registered and licensed with any federal or
state regulatory body of self-regulating agency.) During the term of this
Agreement, Consultant will provide those services customarily provided by an
investor relations firm to a Corporation, including but not limited to the
following:
<Initials of Jack Tortorice appear here>
Columbia Financial Group
(1) Aiding a Corporation in developing a marketing plan directed at
informing the investing public as to the business of the Corporation; and
(2) Providing assistance and expertise in devising an advertising campaign
in conjunction with the marketing campaign as set forth in (1) above; and
(3) Advise the Corporation and provide assistance in dealing with
institutional investors as it pertains to the Company's offerings of its
securities; and
(4) Aid and assist the Corporation in the Corporation's efforts to secure
"market makers" which will trade the Corporation's stock to the public by
providing such information as may be required; and
(5) Aid and advise the Corporation in establishing a means of securing
nationwide interest in the Corporation's securities; and
(6) Aid and assist the Corporation in creating an "institutional site
program" to provide ongoing and continuous information to fund managers; and
(7) Aid and consult with the Corporation in the preparation and
dissemination of press releases and news announcements; and
(8) Aid and consult with the Corporation in the preparation and
dissemination of all "due diligence" packages requested by and furnished to
NASD registered broker/dealers, the investing public, and/or other
institutional and/or fund managers requesting such information from the
Corporation; and
(9) At the Corporation's direction, work with the Corporation's Public
Relations firm to jointly support the Corporation's overall public relations
program.
Compensation
3. In consideration for services provided by Consultant to the
Corporation, the Corporation shall pay or cause to be delivered to the
Consultant each month prior to the termination of this agreement 1/12 of the
warrants set forth in A, B, C below. 400,000 five (5) year warrants with the
following exercise price:
A. 100,000 warrants at $3.00 per share.
B. 100,000 warrants at $4.00 per share.
C. 200,000 warrants at $5.00 per share.
<Initials of Jack Tortorice appear here>
Compliance
4. At the time of Consultants execution of the warrants referred to
in #3, Compensation above, common shares underlying the warrants, delivered by
Corporation to Consultant will, at that particular time, be incorporated, in
the next registration filed by the corporation. The warrants shall have
"piggy back" registration rights and will, at the expense of the Corporation,
be included in said registration.
Representation of Corporation
5. (a). The Corporation, upon entering this Agreement, hereby
warrants and guarantees to the Consultant that to the knowledge of the
Officers of the Company, all statements, either written or oral, made by the
Corporation to the Consultant are true and accurate, and contain no
misstatements of a material fact. Consultant acknowledges that estimates of
performance made by Corporation are based upon the best information available
to Corporation officers at the time of said estimates of performance. The
Corporation officers ant the time of said estimates of performance. The
Corporation acknowledges the information it delivers to the Consultant will be
used by the Consultant in preparing materials regarding the Company's
business, including but not necessarily limited to, its financial condition,
for dissemination to the public. Therefore, in accordance with Paragraph 6,
below, the Corporation shall hold harmless the Consultant from any and all
error, omissions, misstatements, except those made in a negligent or
intentionally misleading manner in connection with all information furnished
by Corporation to Consultant.
6. Consultant shall agree to release information only with written
approval of the Company.
Worldwide Wireless Inc.
1. Authorized: 50mm
2. Outstanding: 11.4mm shares
3. Free trading (float): 4mm shares (approx.)
4. Shares subject to Rule 144 restrictions: 7.4 mm shares (approx.)
<Initials of Jack Tortorice appear here>
Limited Liability
6. With regard to the services to be performed by the Consultant
pursuant to the terms of this Agreement, the Consultant shall not be liable to
the corporation, or to anyone who may claim any right due to any relationship
with the Corporation, or any acts or omissions in the performance of services
on the part of the Consultant, or on the part of the agents or employees of
the Consultant, except when said acts or omissions of the Consultant are due
to its willful misconduct or culpable negligence.
Termination
7. This Agreement may be terminated by either party upon the giving
of not less than ten (10) days written notice, delivered to the parties at
such address or addresses as set forth in Paragraph 8, below. In the event of
a termination, Consultant shall be entitled to the pro-rata monthly warrant
compensation.
<Initials of Jack Tortorice appear here>
Notices
8. Notices to be sent pursuant to the terms and conditions of this
Agreement, shall be sent as follows:
Timothy J. Rieu Jack Tortorice
Columbia Financial Group World Wide Wireless Network, Inc.
1301 York Road, Ste. 400 700 The City Drive, #3400
Lutherville, Maryland 21093 Orange, CA 92868
Attorneys' Fees
9. In the event any litigation or controversy, including arbitration,
arises out of or in connection with this Agreement between parties hereto, the
prevailing party in such litigation, arbitration or controversy, shall be
entitled to recover from the other parties, all reasonable attorney's fees,
expenses and suit costs, including those associated within the appellate or
post judgement collection proceedings.
Arbitration
10. In connection with any controversy or claim arising out of or
relating to this Agreement, the parties hereto agree that such controversy
shall be submitted to arbitration, in conformity with the Federal Arbitration
Act (Section 9 U.S. Code Section 901 et seq), and shall be conducted in
accordance with the Rules of the American Arbitration Association. Any
judgment rendered as a result of the arbitration of any dispute herein, shall
upon being rendered by the arbitrators be submitted to a Court of competent
jurisdiction within the State of Florida or in any state where a party to this
action maintains its principal business or is a Corporation incorporated in
said state.
Governing Law
11. This Agreement shall be construed under and in accordance with
the laws of the State of California, and all parties hereby consent to
California as the proper jurisdiction for said proceedings provided herein.
<Initials of Jack Tortorice appear here>
Parties Bound
12. This Agreement shall be binding on and inure to the benefit of
the contracting parties and their respective heirs, executors,
administrations, legal representatives, successors, and assigns when permitted
by this Agreement.
Legal Construction
13. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, the invalidity, illegality, or unenforceability
shall not affect any other provision, and this Agreement shall be construed as
if the invalid, illegal, or unenforceable provision had never been contained
in it.
Prior Agreements Superseded
14. This Agreement constitutes the sole and only Agreement of the
contracting parties and supersedes any prior understandings or written or oral
agreements between the respective parties hereto.
Multiple Copies or Counterparts of Agreement
15. The original and one or more copies of this Agreement may be
executed by one or more of the parties hereto. In such event, all of such
executed copies shall have the same force and effect as the executed original,
and all of such counterparts taken together shall have the effect of a fully
executed original. Further this Agreement may be signed by the parties and
copies hereof delivered to each party by way of facsimile transmission, and
such facsimile copies shall be deemed original copies for all purposes if
original copies of the parties' signatures are not delivered.
Liability of miscellaneous Expenses
16. The Corporation shall be responsible to any miscellaneous fees
and cost that are approved in writing by the Corporation prior to _______
unrelated to the agreement made between the Parties.
<Initials of Jack Tortorice appear here>
Headings
1. Headings used throughout this Agreement are for reference and
convenience, and in no way define, limit or describe the scope or intent of
this Agreement or effect its provisions.
IN WITNESS WHEREOF, the parties have set their hands and seal as of the
date written above.
BY: /s/ Timothy J. Rieu
-------------------
Timothy J. Rieu, President
Columbia Financial Group
BY: /s/ Jack Tortorice
------------------
World Wide Wireless Network, Inc.
770 The City Drive South, # 3400
Orange, CA 92868
Each Page is Initialed JET
EMPLOYMENT CONTRACT
Pacific Link Internet, Inc., a California corporation, doing business as
Global Pacific Internet, located at 770 The City Drive South, Suite 3400,
Orange, California 992868, hereinafter referred to as Employer, and Dennis
Shen, whose address is 9 Red Coast Place, Irvine California 92802.
ARTICLE 1. TERM OF EMPLOYMENT
Specified Period
Section 1.01 Employer hereby employs Employee and Employee hereby accepts
employment with Employer for period of Five (5) years, beginning on January 1,
1998 and terminating on December 31, 2003.
Automatic Renewal
Section 1.02. This agreement shall be renewed automatically for Four (4)
additional consecutive terms of One (1) year each, unless either party gives
notice to the other at least Ninety (90) days prior to the expiration of any
term of its intention not to renew.
Employment Term Defined
Section 1.03. As used herein, the phrase employment term refers to the entire
period of employment of Employee by Employer hereunder, whether for the
periods provided above, or whether terminated earlier as hereinafter provided
or extended by mutual agreement between Employer and Employee.
ARTICLE 2. DUTIES AND OBLIGATIONS OF EMPLOYEE
General Duties
Section 2.01. Employee shall serve as the President of Employer. In his
capacity as Vice President, Employee shall do and perform all services, acts,
or things necessary or advisable to manage and conduct the business of
Employer, subject at all times to the policies set by Employer's Board of
Directors, and to the consent of the Board when required by the terms of this
agreement.
Matters Requiring Consent of Board of Directors
Section 2.02. Employee shall not, without specific approval of Employer's
Board of Directors, do or contract to do any of the following:
(1) Borrow on behalf of Employer;
(2) Continue to service any customer of Employer which has an outstanding
indebtedness to Employer in excess of $5,000.00;
Devotion to Employer's Business
Section 2.03. Unless agreed to in writing by Employer, (a) Employee shall
devote his entire productive time, ability, and attention to the business of
Employer during the term of this contract.
(b) Employee shall not engage in any other business duties or pursuits
whatsoever, or directly or indirectly render any services of a business,
commercial or professional nature to any other person or organization, whether
for compensation or otherwise, without the prior written consent of Employer's
Board of Directors.
(c) This agreement shall not be interpreted to prohibit Employee from making
passive personal investments or conducting private business affairs if those
activities do not materially interfere with the services required under this
agreement. However, Employee shall not directly or indirectly acquire, hold
or retain any interest in excess of Five (5%) per cent in any business
directly competing with the business of Employer.
Uniqueness of Employee's Services
Section 2.04. Employee hereby represents and agrees that the services to be
performed under the terms of this agreement are of a special, unique, unusual,
extraordinary, and intellectual character that gives them a peculiar value,
the loss of which cannot be reasonably or adequately compensated in damages in
an action at law. Employee therefore expressively agrees that Employer, in
addition to any other rights or remedies that Employer may possess, shall be
entitled to injunctive and other equitable relief to prevent or remedy a
breach of this agreement by Employee.
Indemnification for Negligence or Misconduct.
Section 2.05. Employee and Employer shall mutually indemnify and hold each
other harmless from all liability for loss, damage, or injury to persons or
property resulting from any breach of this agreement by the other.
Trade Secrets
Section 2.06. (a) The parties acknowledge and agree that during the term of
this agreement and in the course of the discharge of his duties hereunder,
Employee shall have access to and become acquainted with information
concerning the operation and processes of Employer, including without
limitation, financial, personnel, sales, scientific, and other information
that is owned by or proprietary to Employer and regularly used in the
operation of Employer's business, and that such information constitutes Employ
trade secrets.
(b) Employee specifically agrees that he shall not misuses, misappropriate, or
disclose any such trade secrets, directly or indirectly, to any other person
or use them in any way, either during the term of the agreement or at any
other time thereafter, except as is required in the course of his employment
hereunder.
(c) Employee acknowledges and agrees that the sale or unauthorized use or
disclose of any Employer's trade secrets obtained by Employee during the
course of his employment under this agreement, including information
concerning Employer's current or any future and proposed work, services, or
products are planned, under consideration, or in production, as well as any
descriptions thereof (Proprietary Information), constitute unfair competition
utilizing Employer's Proprietary Information, during the term of this
agreement or after termination hereof for a period of One (1) year after such
termination.
(d) Employee further agrees that all files, records, documents, drawings,
specifications, equipment, and similar items relating to Employer's business,
whether prepared by Employee or others, are and shall remain exclusively the
property of Employer and that they shall be removed from the premises or
Employer only with the express prior written consent of Employer's Board of
Directors.
ARTICLE 3. OBLIGATIONS OF EMPLOYER
Section 3.01 Employer shall provide Employee with office facilities, parking
privileges, office equipment, supplies and other facilities and services,
suitable to Employee's position and adequate for the performance of his
duties.
Indemnification of Losses of Employees
Section 3.01 Employer shall indemnify Employee for all losses sustained by
Employee in direct consequence of the discharge of his duties on Employers
behalf.
ARTICLE 4. COMPENSATION OF EMPLOYEE
Annual Salary
Section 4.01 (a) As compensation for the services to be performed hereunder,
Employee shall receive a guaranteed salary at the rate of Fifty Thousand
($50,000.00) dollars per annum, payable in equal monthly installments of Four
Thousand One Hundred Sixty Seven ($4,167.00) dollars during the employment
term. Said salary shall be reviewed and renegotiated every three (3) months
with the Directors of Employer. In the event Employer's financial condition
is such that it does not have the funds necessary to pay Employee his monthly
installments for a period of two (2) consecutive months, Employer may, by
action of its board of directors, reduce Employee's salary by 50%, until such
time as Employer's financial condition improves. Employer shall, at the
request of Employer on a "best efforts" basis.
Tax Withholding
Section 4.02. Employer shall have the right to deduct or withhold from the
compensation due to Employee hereunder any and all sums required for federal
income and Social Security taxes and all state or local taxes no applicable or
that may be enacted and become applicable in the future.
ARTICLE 5. EMPLOYEE INCENTIVES
Obligation to Sell and Right of Repurchase of Stock in Employer
Section 5.01. Employee is currently owner of Three Thousand Five Hundred Share
(3,500) of Common Stock of Employer. Employee agrees that the ownership of
the Common Stock is not conditioned upon Employee's continued employment by
Employer. In the event Employee's employment shall terminate, Employee shall
within Thirty (30) days after any such termination, sell transfer and convey
all his rights title and interest in any such owned Common Stock to Employer.
Employer shall pay Employee, as consideration for such stock, an amount equal
to the sum of the following: (i) $25.00 per share, and (ii) the pro rata share
of the Employer's profit to data, if any, as calculated per it's federal
corporation tax return (form 1120S), from the commencement data of employment
through such termination, minus any therefore distributions of profit made by
Employer to Employee.
ARTICLE 6. EMPLOYEE BENEFITS
Annual Vacation
Section 6.01. Employee shall be entitled to three (3) weeks vacation each
year, and those business days which fall between Christmas and New Year's day,
without loss of compensation. Employee may be absent from his employment for
vacation only at such times as Employer's Board of Directors shall determine
from time to time. In the event that Employee is unable for any reason to take
the total amount of vacation days authorized herein during and year, she shall
be entitled to use such untaken vacations days in the next year of employment.
ARTICLE 7 BUSINESS EXPENSES
Use of Credit Card
Section 7.02. (a) Employer shall promptly reimburse Employee for all other
reasonable business expenses incurred by Employee in connection with the
business of Employer.
(b) Each such expenditure shall be reimbursable only if it is of a
nature qualifying it as a roper deduction on the federal and state income tax
return of Employer.
(c) Each such expenditure shall be reimbursable only if Employee
furnishes to Employer adequate records and other documentary evidence required
by federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of each such expenditure as an income tax
deduction.
Notwithstanding the forgoing, Employee shall not incur expenses in excess of
Five Hundred ($500.00) dollars, excluding expenses incurred in connection with
travel outside of the metropolitan Los Angeles area, without obtaining the
prior consent of Employer, which consent shall not be unreasonably withheld or
delayed.
Repayment of Disallowed Expenses
Section 7.03. In the event that any expenses paid for Employee or any
reimbursement of expenses paid to Employee shall, on audit or other
examination of Employer's income tax returns, be determined not to be allowed
deductions from Employer's gross income because of Employee's
misrepresentation or characterization of such expenses, and in further event
that this determination shall be acceded to by the Employer or made final by
the appropriate federal or state taxing authority or a final judgment of a
court of competent jurisdiction, and no appeal is taken from the judgment or
the applicable period for filing notice of appeal has expired, Employee shall
repay to Employer the full amount of the disallowed expenses.
ARTICLE 8. TERMINATION OF EMPLOYMENT
Termination for Cause
Section 8.01. (a) Employer reserves the right to terminate this agreement
if Employee willfully breaches or habitually neglects the duties which he is
required to perform under the terms of this agreement; or commits such acts of
dishonesty, fraud, misrepresentation or other acts of moral turpitude as would
prevent the effective performance of his duties.
(b) Employer may at its option terminate this agreement for the
reasons stated in this section by giving written notice of termination to
Employee without prejudice to any other remedy to which employer maybe
entitled either at law, in equity, or under this agreement. Not withstanding
the foregoing, as a condition precedent to such termination, Employer shall
have provided Employee with written notice of his breach, setting forth in
detail the cause thereof, and providing Employee with an opportunity to
respond to such claim.
(c) The notice of termination required by this section shall specify
the ground for the termination and shall be supported by a statement of
relevant facts.
(d) Termination under this section shall be considered "for cause"
for the purposes of this agreement.
Termination by Employee
Section 8.02 Employee may terminate his obligations under this agreement by
giving Employer at least Thirty (30) days notice in advance. In the event
Employee shall terminate his obligations hereunder, Employee shall not be
entitled to any payment of unpaid annual salary from Employer.
ARTICLE 9. GENERAL PROVISIONS
Notices
Section 9.01 Any notices to be given hereunder by either party to the other
shall be in writing and may be transmitted by personal delivery or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the addresses appearing in the
introductory paragraph of this agreement, but each party may change that
address by written notice in accordance with this section. Notices deliver
personally shall be deemed communicated as of the date of actual receipt;
mailed notice shall be deemed, communicated as of the date of mailing.
Arbitration
Section 9.02 (a) Any controversy between Employer and Employee involving
the construction or application of any of the terms, provision, or conditions
of this agreement shall on the written request of either party served on the
other be submitted to arbitration. Arbitration shall comply with and be
governed by the provisions of the California Arbitration Act.
(b) Employer and Employee shall each appoint one person to hear and
determine the dispute. If the two persons so appointed are unable to agree,
then those persons shall select a third impartial arbitrator whose decision
shall bed final and conclusive upon both parties.
(c) The cost of arbitration shall be borne by the losing party or in
such proportions the arbitrators decide.
Attorney's Fees and Costs
Section 9.03. If any action at law or in equity is necessary to enforce
or interpret the terms of this agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs, and necessary disbursement in
addition to any other relief to which that party may be entitled, This
provision shall be construed as applicable to entire agreement.
Consents
Section 9.04. Employer agrees that all consents required of it hereunder
shall neither be unreasonably withheld nor delayed.
Entire Agreement
Section 9.05. This agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to the
employment of Employee by Employer and contains all of the covenants and
agreements between the parties with respect to that employment in any manner
whatsoever. Each party to this agreement acknowledges that no representation,
inducements, promises, or agreements, orally or otherwise, have been made by
any party, or anyone acting on behalf of any party, which are not embodies
herein, and that no other agreement, statement, or promise not contained in
this agreement shall be valid or binding on either party.
Modifications
Section 9.06. Any modification of this agreement will be effective only
if it is writing and signed by the party to be charged.
Effective of Waiver
Section 9.07. The failure of either party to insist on strict compliance
with any of the terms, covenants, or conditions of this agreement by the other
party shall not be deemed a waiver of that term, covenant, or condition, nor
shall any waiver or relinquishment of any right or power at any one time or
times be deemed a waiver or relinquishment of that right or power for all or
any other times.
Partial Invalidity
Section 9.08. If any provision in this agreement is held by a court of
competent jurisdiction to be valid, void, or unenforceable, the remaining
provision shall nevertheless continue in full force without being impaired or
invalidated in any way.
Facsimile Signatures
Section 9.09 Any signed copy of this agreement or of any other document
or agreement referred to herein, or copy or counterpart thereof, delivered by
facsimile transmission, shall for all purposes be treated as if it were
delivered containing an original manual signature of the party whose
signatures appears in the facsimile, and shall be binding upon such party in
the same manner as though an originally signed copy had been delivered.
Law Governing Agreement
Section 9.10. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
Executed on __________, 1997, at Orange, California.
Employer:
Pacific Link Internet, Inc., a California corporation
by: /s/ Jack Tortorice
its: CEO
Employee:
/s/ Dennis Shen
- ---------------
Dennis Shen
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 to Employment Agreement is dated as of the 1st day
of January 1999, by and between Dennis Shen (Employee) and Pacific Link
Internet, Inc., a California corporation doing business as Global Pacific
Internet (Employer).
The parties hereby agree to amend that certain Employment Agreement dated
as of _______, 1997 (the "Employment Agreement"), as set forth below:
Section 4.01 (a) of the Agreement is hereby amended to provided for a
guaranteed salary of $70,000 per year.
Article 6 is hereby amended by adding the following Section 6.02.
"Car Allowance
Section 6.02 Employee shall be entitled to a car allowance of $500
per month during the term of this Agreement. In this regard Employee shall be
responsible for the payment of all expenses relating to the use of such car."
Excepted as expressly provided herein, this Agreement shall not alter,
amend, or otherwise modify the terms and provisions of the Employment
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date fires above written.
Employee Employer
/s/ Dennis Shen
- --------------- By: /s/ Jack Tortorice
Dennis Shen Name:Jack Tortorice
Its: CEO
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 to Employment Agreement is dated as of the 1st day
of January 1999, by and between Jack Tortorice (Employee) and Pacific Link
Internet, Inc., a California corporation doing business as Global Pacific
Internet (Employer).
The parties hereby agree to amend that certain Employment Agreement dated
as of _______, 1997 (the "Employment Agreement"), as set forth below:
1. Section 4.01 (a) of the Agreement is hereby amended to provided for a
guaranteed salary of $98,000 per year.
2. Article 6 is hereby amended by adding the following Section 6.02.
"Car Allowance
Section 6.02 Employee shall be entitled to a car allowance of $500
per month during the term of this Agreement. In this regard Employee shall be
responsible for the payment of all expenses relating to the use of such car."
3. Excepted as expressly provided herein, this Agreement shall not alter,
amend, or otherwise modify the terms and provisions of the Employment
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date fires above written.
Employee Employer
/s/ Jack Tortorice
- ------------------ By: /s/ Dennis Shen
Jack Tortorice Name:Dennis Shen
Its: President
<FEDERAL COMMUNICATIONS COMMISSION STAMP APPEARS HERE>
FEDERAL COMMUNICATIONS COMMISSION
PRIVATE OPERATIONAL FIXED MICROWAVE RADIO STATION LICENSE
LICENSEE
GLOBAL PACIFIC INTERNET
770 THE CITY DRIVE SOUTH, STE 3400
ORANGE, CA 92868
ASSOCIATED BROADCAST STATION
FILE NUMBER 748654
CALL SIGN WPOT648
RADIO SERVICE
MW INDUSTRIAL/BUSINESS
STATION CLASS
FIXED
EFFECTIVE DATE
07/07/1999
CONSTRUCTION DATE
01/07/2001
EXPIRATION DATE
07/07/2009
SPECIAL CONDITIONS OF GRANT: NONE
SITES
TRANSMITTER STREET ADDRESS COUNTY CITY ST
72 E. CORPORATE PKWY ORANGE IRVINE CA
SITE NO. LATITUDE LONGITUDE DATUM ELEVATION (FT)
001 33-41-31.1 N 117-49-21-.4 W N27 82
002 33-40-46.7 N 117-50-17.2 W N27 Receiver Site
TIP HEIGHT (FT) ANTENNA PAINTING & LIGHTING CODES
115 FCC FORM 715/715A
FREQUENCY PATHS
FREQUENCY AND POWER INFORMATION PATH
FREQUENCY TOLERANCE EMISSION EIRP
(MHZ) (%) DESIGNATOR (DBM)
OR CHANNEL
023325.000000 0.00010 50MOD7W 57.1
SEGMENT INFORMATION
SEG EMIT ANT BEAM- HTxWD POL AZIM RECEIVER
NO SITE HGT WIDTH (FT) (DEG) SITE CALL SIGN
NO (FT) (DEG) NO
1 001 111 1.6 H 226.4 002 WPOT649
<FEDERAL COMMUNICATIONS COMMISSION STAMP APPEARS HERE>
FEDERAL COMMUNICATIONS COMMISSION
PRIVATE OPERATIONAL FIXED MICROWAVE RADIO STATION LICENSE
LICENSEE
GLOBAL PACIFIC INTERNET
770 THE CITY DRIVE SOUTH, STE 3400
ORANGE, CA 92868
ASSOCIATED BROADCAST STATION
FILE NUMBER 748655
CALL SIGN WPOT649
RADIO SERVICE
MW INDUSTRIAL/BUSINESS
STATION CLASS
FIXED
EFFECTIVE DATE
07/07/1999
CONSTRUCTION DATE
01/07/2001
EXPIRATION DATE
07/07/2009
SPECIAL CONDITIONS OF GRANT: NONE
SITES
TRANSMITTER STREET ADDRESS COUNTY CITY ST
ONE PARK PLAZA CIR ORANGE IRVINE CA
SITE NO. LATITUDE LONGITUDE DATUM ELEVATION (FT)
001 33-40-46.7 N 117-50-17.2 W N27 75
002 33-41-31.1 N 117-49-21.4 W N27 Receiver Site
TIP HEIGHT (FT) ANTENNA PAINTING & LIGHTING CODES
308 FCC FORM 715/715A
FREQUENCY PATHS
FREQUENCY AND POWER INFORMATION PATH
FREQUENCY TOLERANCE EMISSION EIRP
(MHZ) (%) DESIGNATOR (DBM)
OR CHANNEL
023325.000000 0.00010 50MOD7W 57.1
SEGMENT INFORMATION
SEG EMIT ANT BEAM- HTxWD POL AZIM RECEIVER
NO SITE HGT WIDTH (FT) (DEG) SITE CALL SIGN
NO (FT) (DEG) NO
1 001 111 1.6 H 226.4 002 WPOT649
BRIDGE
TECHNOLOGY, INC.
AGREEMENT
This agreement supersedes the letter of intent of April 21, 1999 between
Bridge Technology, Inc. ("BTGY") and Global Pacific Wireless Internet, a
Division of Worldwide Wireless Networks, Inc. ("GP").
1. BTGY is a diversified research, manufacturing, computer systems
enhancement products company interested in developing a wireless internet
access communications system for the Asian market through a subsidiary,
Pacific Bridge Net ("PBN").
2. GP is designing, installing and operation wireless internet access
communications systems throughout the U.S.A., initially in Orange County,
California.
3. The capitalization of PBN initially is to be $250,000 of which GP is to
invest $50,000 for 20% and BTGY is to invest $200,000 for 80%.
4. Concurrent with funding PBN is to acquire the know-how, current and
developing for a wireless internet ATM ethernet bridge or router with voice
and video capability which complies with U.S. patent and FCC regulations for a
cash price of $50,000.
5. The know-how acquired by PBN includes specifications and parameters for
certain radio equipment and software to be developed, patented, licensed and
manufactured by PBN, in conjunction with others.
6. GP will have the exclusive sales rights for the radio equipment for the
U.S. market.
7. PBN agrees to have the radio equipment manufactured in Asia, probably
China, and to sell the radio equipment for the U.S. market on an exclusive
basis to GP at cost plus 10% handling fee.
8. In addition to purchasing the know-how for GP, GP agrees to offer and PBN
agrees to use the consulting services of both Jack Tortorice and Dennis Shen
to PBN and they are to be reimbursed by PBN for these expenses.
May 20, 1999
Bridge Technology, Inc.
/s/ James D'jen
- ----------------------
James D'jen
President
May 20, 1999
Global Pacific
Division of Worldwide Wireless Networks, Inc.
/s/ Jack Tortorice
- ------------------
Jack Tortorice
12601 Monarch Street, Garden Grove, CA 92841, Tel (714) 891-6508, Fax (714)
890-8590, www.bridgeus.com
PURCHASE AGREEMENT
THIS AGREEMENT is made as of Oct. 27, 1999 (the "Effective Date") by and
between ADAPTIVE BROADBAND CORPORATION ("Adaptive Broadband"), a Delaware
corporation with a principal office at 1143 Borregas Avenue, Sunnyvale, CA
94089, and GLOBAL PACIFIC INTERNET __________ ("Buyer"), a California
corporation with a principal office at 770 The City Drive South, Suite 3400,
Orange, CA 92868.
Recital:
Adaptive Broadband is a developer, manufacturer and supplier of wireless
telecommunications equipment. Buyer desires to provide wireless
communications network services in Los Angeles and Orange Counties for
independent internet service providers and to otherwise re-sell the Products
(defined below) to those and other buyers within and for end-use in the United
States. Adaptive Broadband and Buyer each desire for Adaptive Broadband to
sell and Buyer to purchase such products for use in connection with those
services and for re-sale to those buyers, all on the terms and conditions set
forth in this Agreement.
Provisions:
NOW, THEREFORE, in consideration of the mutual representations, warranties and
covenants contained in this Agreement, the parties agree as follows:
1. SCOPE OF AGREEMENT.
a. Equipment. Buyer agrees to buy and Adaptive Broadband agrees to sell
to Buyer the products described in and in accordance with Exhibit A attached
to this Agreement ("Products") and the services described in Exhibit B
attached to this Agreement ("Services") under the terms and conditions of this
Agreement; provided, however, that after the first shipment of Products under
this Agreement, Buyer's obligation to purchase additional Products is subject
to the following:
i. Buyer will install and perform tests on that first shipment of
Products within 45 days after delivery to determine if they perform in
accordance with Adaptive Broadband's published, specifications in all material
respects. By that 45th day, Buyer will send written notice to Adaptive
Broadband indicating whether those first Products performed in accordance with
Adaptive Broadband's published specifications in all material respects and, if
not, provide detailed information concerning the tests performed and results
achieved.
ii. If Buyer's notice indicates proper performance was achieved as
described above or Buyer fails to give any notice within those 45 days, then
its purchase, obligations vest on the sooner of the date of the notice or that
45th day.
iii. If Buyer's notice indicates that proper performance was not
achieved as described above, then Buyer will grant Adaptive Broadband access
to its related facilities, equipment, personnel and test procedures and
records and allow Adaptive Broadband the opportunity to repair, replace, or
otherwise test those Products, with all expenses for Adaptive Broadband time,
travel, and related repairs, replacements and tests being borne by Adaptive
Broadband. If Buyer reasonably determines within 10 days following the initial
45 day period that those first Products still do not perform in accordance
with Adaptive Broadband's published specifications in all material respects,
then Buyer's purchase obligations beyond that first shipment are waived, null
and void. However, if Buyer does not so reasonably determine Product non-
performance within those additional 10 days, then its purchase obligations
vest on that 45th day.
iv. The date on which Buyer's purchase obligations vest as set forth
above (if at all) is referred to as the "Satisfaction Date".
<INITIALS OF JACK TORTORICE APPEAR HERE>
<PAGE>
v. Buyer and Adaptive Broadband will use commercially reasonable efforts
to avoid any delays in the initial installation and testing of that first
shipment of Products.
b. Purchase Orders. Buyer may issue purchase orders for any Products or
Services ("Purchase Orders") to Adaptive Broadband via mail or facsimile, in
form and content acceptable to Adaptive Broadband. The terms and conditions of
this Agreement will govern the relationship between the parties and each
Purchase Order. Therefore, each Purchase Order will automatically be deemed
to include all the terms and provisions of this Agreement, and any contractual
terms and conditions contained in a Purchase Order or its reverse side will
not apply and will be null and void, except to the extent that Adaptive
Broadband expressly accepts such other or additional terms and conditions in
writing with specific reference to the conflict or addition.
c. Shipping Fairness. In the event that Adaptive Broadband runs into
Product shortages or other circumstances where Product demand exceeds Adaptive
Broadband's Product supply, it will keep Buyer informed and treat Buyer
equitably with respect to the timing of shipments under Buyer purchase orders
and Adaptive Broadband will negotiate with Buyer in good faith in connection
with the satisfaction of those Adaptive Broadband obligations.
2.PRICING AND PAYMENT.
a. Pricing. All prices are FOB Adaptive Broadband's relevant facility or
its supplier's dock, as may be specified by Adaptive Broadband, and are valid
for the term of this Agreement. The prices for Products and Services are set
forth in Exhibit A and Exhibit B, respectively. Adaptive Broadband warrants
that the prices charged to Buyer now and in the future are not, on a per-unit
basis and concurrent time basis, less favorable than those currently and in
the future extended to other customers for the same or similar purchases in
similar quantities and on the same or similar terms.
b. Payment. All payments by Buyer will be made to Adaptive Broadband
pursuant to the payment terms and conditions set forth in Adaptive Broadband's
Standard Terms and Conditions of Sale, attached to this Agreement as Exhibit
C.
3. FORECASTING.
Each month, Buyer will provide Adaptive Broadband with (a) a rolling six month
forecast of specific Product unit requirements for each of those six months,
and (b) firm Purchase Orders covering its specific Product unit requirements
for a rolling 120 days before desire shipment. In the event that Adaptive
Broadband's scheduled shipment of certain Products ("Delayed Products") is
delayed for any reason other than Buyer's breach of this Agreement, then Buyer
may at its option suspend the shipment of other Products under previously
accepted purchase orders which were otherwise scheduled for shipment after the
Delayed Products, with that suspension being for a period up to the duration
of the delay of Delayed Products.
4. GENERAL TERMS AND CONDITIONS.
Adaptive Broadband's Standard Terms and Conditions of Sale is attached to this
Agreement as Exhibit C and is hereby incorporated by reference into this
Agreement and made a part hereof.
5. TRAINING.
Training is offered by Adaptive Broadband to Buyer as and to the extent set
forth in Exhibit D.
6. REPRESENTATIONS, WARRANTIES, AND COVENANTS.
a. By Adaptive Broadband. Adaptive Broadband represents and warrants to
Buyer and covenants that: (i) Adaptive Broadband has all corporate power and
authority to enter into this Agreement and consummate the transactions
contemplated hereby. (ii) Adaptive Broadband shall not utilize, in any manner
whatsoever the corporate names or any trademark or trade name or copyright
rights belonging to Buyer in connection with any equipment or service without
the prior written
<PAGE>
approval of Buyer. This requirement of consent will survive the expiration or
early termination of this Agreement. Adaptive Broadband will not contest the
validity of any of Buyer's or other Product manufacturer's patents,
trademarks, trade names or copyrights used in connection with Products. (iii)
All governmental approvals, permits, and authorizations from all applicable
parties which are necessary for the performance by Adaptive Broadband of its
obligations under this Agreement, and in furtherance of its purposes set forth
in the recitals above, will be timely obtained and maintained by Adaptive
Broadband at its own expense. (iv) Adaptive Broadband is free to make this
Agreement and the making hereof and/or performance hereunder by it or any of
its officers, directors, employees, contractors, consultants, and agents will
not violate the legal and/or equitable rights or interests of any third party.
b. By Buyer. Buyer represents and warrants to Adaptive Broadband and
covenants that: (i) Buyer has all corporate power and authority to enter into
this Agreement and consummate the transactions contemplated hereby. (ii)
Buyer shall not utilize, in any manner whatsoever the corporate names or any
trademark or trade name or copyright rights belonging to Adaptive Broadband or
other Product manufacturers in connection with any equipment or service
without the prior written approval of Adaptive Broadband or the relevant
manufacturer. This requirement of consent will survive the expiration or early
termination of this Agreement. Buyer will not contest the validity of any of
Adaptive Broadband's or other Product manufacturer's patents, trademarks,
trade names or copyrights used in connection with Products. (iii) All
governmental approvals, permits, and authorizations from all applicable
parties which are necessary for the performance by Buyer of its obligations
under this Agreement, and in furtherance of its purposes set forth in the
recitals above, will be timely obtained and maintained by Buyer at its own
expense. (iv) Buyer is free to make this Agreement and the making hereof
and/or performance hereunder by it or any of its officers, directors,
employees, contractors, consultants, and agents will not violate the legal
and/or equitable rights or interests of any third party.
c. Notwithstanding the foregoing, either party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities.
7.TERM AND TERMINATION.
a. Term. This Agreement will be effective as of the Effective Date and
will continue for the period ending the earlier of 48 months thereafter or 36
months after the Satisfaction Date (as defined in Exhibit A), subject to
earlier termination in accordance with this Agreement.
b. Termination. Adaptive Broadband and Buyer each may by written notice
to the other terminate this Agreement:
I. If a receiver is appointed for the other party or its property;
ii. If the other party becomes insolvent or unable to pay its debts as
they mature in the ordinary course of business or makes an assignment for the
benefit of its creditors;
iii. If any proceedings are commenced by or for the other party under
bankruptcy, insolvency, or debtor's relief law, and those proceedings will not
be vacated or set aside or stayed within sixty (60) days from the date of the
commencement thereof;
iv. If the other party is sequestered by any government authority;
v. If Buyer is liquidated, dissolved, or sells all or substantially all
of its assets;
vi.If Adaptive Broadband is not satisfied with the sales or promotional
performance of Buyer.
vii.If Buyer is not satisfied with the performance of Adaptive Broadband
under this Agreement.
c. Upon Expiration or Termination. Upon expiration or early termination
of this Agreement for any reason, and notwithstanding that expiration or
termination:
I. All provisions of this Agreement will survive with respect to each
Purchase Order accepted by Adaptive Broadband prior to the effective date of
the expiration or termination until each party's obligations with respect to
that Purchase Order is either satisfied or waived;
<PAGE>
ii. Termination of this Agreement shall be without prejudice to the
rights and remedies of the party which may have accrued to either party as at
the date of expiration or termination.
iii. Notwithstanding the expiration or early termination of this
Agreement, Sections 7 and 8 and the provisions of Exhibit C ("Terms and
Conditions") as they apply to any outstanding Purchase Orders shall remain in
full force and effect and Adaptive Broadband shall still make available in
accordance with the terms hereof Services to which Buyer is otherwise entitled
in respect of Products supplied to Buyer prior to the date of termination.
iv. Notwithstanding the expiration or early termination of this
Agreement, the 5% additional payment provisions of Exhibit A and the
prerequisites of those payment provisions will survive until Buyer's
obligations under those provisions, if any exist immediately before that
expiration or termination, are satisfied.
v. Notwithstanding the expiration or early termination of this
Agreement, the "Confidentiality" provision of Exhibit C will survive for a
period of 5 years thereafter.
vi.Buyer will within 30 days after expiration or termination return to
Adaptive Broadband in (at Buyer's sole cost and expense) (or at Adaptive
Broadband's request eradicate or destroy): all literature, manuals and
materials supplied to it by Adaptive Broadband and which are in Buyer's
possession but which are not needed by Buyer in connection with installed
Product; all equipment provided to it by Adaptive Broadband and which Buyer
did not purchase, in the condition in which it was sent by Adaptive Broadband;
all tangible and intangible embodiments of Adaptive Broadband intellectual
property, including software; and any other items which Adaptive Broadband may
reasonably request.
8. MISCELLANEOUS
a. Sole Agreement: Amendment: Waivers. This Agreement (together with its
Exhibits and their attachments which are hereby incorporated into this
Agreement by reference and made a part hereof) contains the entire
understanding between Adaptive Broadband and Buyer with respect to its subject
matter and supersedes all prior discussions, agreements and understandings
between them with respect to that subject matter. All amendments hereto and
all agreements between the parties supplemental to this Agreement must be in
writing and signed by the parties hereto. The waiver by either party of a
breach or violation of any provision of this Agreement must be in writing and
will not operate or be construed as a waiver of any subsequent breach or
violation.
b. Independent Contractor. Each party acknowledges and agrees that this
Agreement establishes an independent contractor relationship and each
disclaims the existence of any employer/employee relationship or partnership
or joint venture relationship between them. Neither party has authority to
act for, represent, or bind the other and neither will take or fail to take
any action inconsistent with this paragraph.
c. Liability and Indemnification. The extent of Adaptive Broadband's
liabilities to Buyer are solely and exclusively set forth in Exhibit C.
Neither Adaptive Broadband nor Buyer will be liable under this Agreement for
any consequential damage including loss of clientele, loss of business, loss
of data, or loss of profits. Buyer will not be entitled to an indemnity for
goodwill or other compensation upon termination of this Agreement at any time
for any reason.
d. Assignment. Neither party may assign either this Agreement or any of
its rights, interests or obligations hereunder without the prior written
approval of the other party, which consent shall not be unreasonably withheld
or delayed. Notwithstanding the foregoing, each party may assign this
Agreement upon notice to, but without consent of the other party, to an
affiliate or successor in interest in the event of a merger, consolidation, or
sale of all or substantially all of the Assignor's business, assets, or
capital stock, or all or substantially all of the business or assets of the
Product line; provided, however, that the assignee shall expressly assume the
assignor's obligations under this Agreement, be subject to all of the terms
and conditions of this Agreement, and have the financial and business strength
to satisfy the assignor's obligations under this Agreement.
<PAGE>
e. Severability. If any provision of this Agreement is determined by a
court of competent jurisdiction to be unenforceable or illegal, then it will
be deemed removed from the other provisions of this Agreement which will
remain in effect.
f. Headings. Headings in this Agreement are included for convenience only
and themselves have no force or effect.
g. Property. Without limiting the other provisions of this Agreement, any
ideas, concepts, inventions, know-how, data-processing and other techniques,
software or documentation developed by Adaptive Broadband (alone or jointly
with Buyer) in connection with any Products or Services will be the exclusive
property of Adaptive Broadband.
h. Publicity. Neither party shall issue any press release or make any
public announcement relating to this Agreement or its subject matter without
the prior written approval of the other, provided that either party may make
any public disclosure it believes in good faith is required by applicable law
or any listing or trading agreement concerning its publicly-traded securities
(in which case the disclosing party will use its best efforts to advise the
other party prior to making the disclosure).
i . Governing Law and Related Matters. This Agreement and each purchase
order accepted by Adaptive Broadband will be governed by and construed in
accordance with the internal laws of the State of California, USA, including
the U.C.C. as adopted by that State, but without reference to conflict of laws
principles. The United Nations Convention on the International Sale of Goods
will not apply to this Agreement. Buyer will observe and comply with all
applicable governmental laws, rules and regulations. Buyer will promptly
indemnify Adaptive Broadband for all damages, fines, and related expenses
(including attorneys' fees) resulting from or arising out of Buyer's violation
of any such law, rule or regulation or breach of this paragraph.
j.Notices. Except as otherwise provided in this Agreement, all notices,
requests, and other communications under this Agreement will be in writing and
sent by registered post or facsimile addressed to:
If to Adaptive Broadband, to: If to Buyer to:
Adaptive Broadband Corporation Jack Tortorice
1143 Borregas Avenue Global Pacific Internet
Sunnyvale, CA 94089 770 City Drive South, Orange
Attn: Salvatore Benti Attn: Steve Button
Fax: (408) 732-4244 Fax: (714) 937-6310
With a copy to:With a copy to:
Adaptive Broadband Corporation __________N/A_______________
1143 Borregas Avenue ____________________________
Sunnyvale, CA 94089 ____________________________
Attn: General Counsel Attn: ______________________
Fax: (408) 732-4244 Fax: ______________________
Any notice sent by fax shall be deemed to be delivered the next working day
following confirmed transmission, and any notice sent by post shall be deemed
to be delivered five working days following the date of posting. Either party
may change the address under this section by giving the other party proper
notice.
IN WITNESS WHEREOF, Adaptive Broadband and Buyer each executed and deliver
this Agreement as of the date fast written above.
Buyer: Adaptive Broadband Corporation:
Co Name: Global Pacific Internet
By: /s/ Jack Tortorice By: /s/ Salvadore S. Benti
Name: Jack Tortorice Name: Salvadore S. Benti
Title: CEO Title: Sr. V.P.
Date: 10/27/99 Date: Oct. 27, 1999
TABLE OF EXHIBITS
------------------
Exhibit A - Products and Related Pricing
Exhibit B - Services and Related Pricing
Exhibit C - Adaptive Broadband's Standard Terms and Conditions of Sale
Exhibit D - Training and Related Pricing
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Plan") is made this 31st day of March
1999, among Worldwide Wireless Networks, Inc., a Nevada corporation ("WWN");
Pacific Link Internet, Inc., a California corporation, any and all of its
subsidiaries and fictitious names (hereinafter collectively referred to as
"Pacific") and its shareholders (hereinafter "Shareholders").
WWN wishes to acquire one hundred percent (100%) of the issued and
outstanding stock of Pacific for and in exchange for stock of WWN, in a stock
for stock transaction intending to qualify as a tax-free exchange pursuant to
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended. The
parties intend for this Plan to represent the terms and conditions of such
tax-free reorganization, which Plan the parties hereby adopt.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, IT IS AGREED:
Section 1
Terms of Exchange
1.1 Number of Shares. Upon the execution hereof, the holders of all the
issued and outstanding stock of Pacific agree to assign, transfer, and
deliver to WWN, free and clear of all liens, pledges, encumbrances, charges,
restrictions or known claims of any kind, nature or description, all of their
shares of Pacific stock, and WWN agrees to acquire such shares on the date
thereof, or as soon as practicable thereafter, by issuing and delivering in
exchange therefore solely common shares of WWN's stock, par value $0.001, in
the aggregate of 7,000,000 shares, of the then authorized shares of WWN
subject to the provisions of this Plan. Subsequent to the date hereof, the
Shareholders shall, upon the surrender of the Pacific certificates
representing their respective beneficial and record ownership of one hundred
percent (100%) of the issued and outstanding shares of Pacific to WWN, as soon
as practicable hereafter, will receive a certificate(s) evidencing shares of
the exchanged WWN stock as provided for herein. Upon the consummation of the
transaction contemplated herein, WWN shall merge with Pacific and become the
surviving corporation.
1.2 Anti-Dilution. For all relevant purposes of this Plan, the number
of WWN shares to be issued and delivered pursuant to this Plan shall be
appropriately adjusted to take into account any stock split, stock dividend,
reverse stock split, recapitalization, or similar change in WWN common stock,
which may occur between the date of the execution of this Plan and the date of
the delivery of such shares.
1.3 Delivery of Certificates. The Shareholders shall transfer to WWN at
the closing provided for in Section 2 (the "Closing") the shares of common
stock of Pacific listed opposite their respective names on Exhibit A hereto
(the "Pacific shares") in exchange for shares of the common stock of WWN as
outlined above in Section 1.1 hereof (the "WWN Stock"). All of such shares of
WWN stock shall be issued at the closing to the Shareholders, in the numbers
shown opposite their respective names in Exhibit "A." The transfer of Pacific
shares by the Shareholders shall be effected by the delivery to WWN at the
Closing of certificates representing the transferred shares endorsed in blank
or accompanied by stock powers executed in blank with all necessary transfer
taxes and other revenue stamps affixed and acquired at the Shareholders'
expense.
1.4 Further Assurances. Subsequent to the execution hereof, and from
time to time thereafter, the Shareholders shall execute such additional
instruments and take such other action as WWN may request in order to more
effectively sell, transfer and assign clear title and ownership in the Pacific
shares to WWN.
Section 2
Closing
2.1 Closing. The Closing contemplated by Section 1.3 shall be held at
the law offices of Daniel W. Jackson, Esq. on or before April 1, 1999 or at
such other time or place as may be mutually agreed upon in writing by the
parties. The Closing may also be accomplished by wire, express mail or other
courier service, conference telephone communications or as otherwise agreed by
the respective parties or their duly authorized representatives. In any
event, the closing of the transactions contemplated by this Plan shall be
effected as soon as practicable after all of the conditions contained herein
have been satisfied.
2.2 Closing Events. At the Closing, each of the respective parties
hereto shall execute, acknowledge and deliver (or shall cause to be executed,
acknowledged, and delivered) any agreements, resolutions, rulings, or other
instruments required by this Plan to be so delivered at or prior to Closing,
together with such other items as may be reasonably requested by the parties
hereto and their respective legal counsel in order to effectuate or evidence
the transaction contemplated hereby.
2.3 Mediation Arbitration. If a dispute arises out of or relates to
this Plan, or the breach thereof, and if said dispute cannot be settled
through direct discussions, the parties agree to first endeavor to settle the
dispute in an amicable manner by mediation following under the Commercial
Mediation Rules of the American Arbitration Association, before resorting to
arbitration. Thereafter, any unresolved controversy or claim arising out of
or relating this Plan, or breach thereof, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the Award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
Section 3
Representations, Warranties and Covenants of WWN
WWN represents and warrants to, and covenants with, the Shareholders and
Pacific as follows:
3.1 Corporate Status. WWN is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. WWN has
full corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business on all material respects as it is now being conducted, and there is
no jurisdiction in which the character and location of the assets owned by it,
or the nature of the business transacted by it, requires qualification.
Included in the WWN schedules (defined below) are complete and correct copies
of its Articles of Incorporation and Bylaws as in effect on the date hereof.
The execution and delivery of this Plan does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of WWN's
Articles of Incorporation or Bylaws. WWN has taken all action required by
law, its Articles of Incorporation, its Bylaws, or otherwise, to authorize the
execution and delivery of this Plan.
3.2 Capitalization. The authorized capital stock of WWN as of the date
hereof consists of 25,000,000 common shares, par value $0.001. The common
shares of WWN issued and outstanding are fully paid, non-assessable shares and
have been issued in compliance with all applicable federal and state
securities laws. As of the date hereof, there are 4,000,000 shares of common
stock issued and outstanding. There are no outstanding options, warrants,
obligations convertible into shares of stock, or calls or any understanding,
agreements, commitments, contracts or promises with respect to the issuance of
WWN's common stock or with regard to any options, warrants or other
contractual rights to acquire any of WWN's authorized but unissued common
shares. As of the Closing, WWN shall have not more than 10,000,000 shares
issued and outstanding.
3.3 Financial Statements.
(a) WWN hereby warrants and covenants to Pacific that the audited
financial statements for the year ended December 31, 1997, fairly and
accurately represent the financial condition of WWN and that no material
change has occurred in the financial condition of WWN since the date thereof.
(b) WWN hereby warrants and represents that the audited financial
statements for the periods set forth in subparagraph (a), supra, fairly and
accurately represent the financial condition of WWN as submitted heretofore to
Pacific for examination and review.
3.4 Conduct of Business. WWN will use its best efforts to maintain and
preserve its business organization, employee relationships and goodwill
intact, and will not, without the prior written consent of Pacific, enter into
any material commitments except in the ordinary course of business.
WWN will conduct itself in the following manner pending the Closing:
(a) Certificate of Incorporation and Bylaws. No change will be made in
the Articles of Incorporation or Bylaws of WWN. Except as contemplated in
Section 3.14 of this Plan.
(b) Capitalization, etc. Except as contemplated in Sections 3.14 and
3.15 of this Plan, WWN will not make any change in its authorized or issued
shares of any class, declare or pay any dividend or other distribution, or
issue, encumber, purchase or otherwise acquire any of its shares of any class.
3.5 Options, Warrants and Rights. WWN has no options, warrants or stock
appreciation rights related to the authorized but unissued WWN common stock.
There are no existing options, warrants, calls, or commitments of any
character relating to the authorized and unissued WWN common stock, except
options, warrants, calls, or commitments, if any, to which WWN is not a party
and by which it is not bound.
3.6 Title to Property. WWN has good and marketable title to all of its
properties and assets, real and personal, proprietary or otherwise, as will be
reflected in the balance sheets of WWN, and the properties and assets of WWN
are subject to no mortgage, pledge, lien or encumbrance, unless as otherwise
disclosed in its financial statements.
3.7 Litigation. There are no material actions, suits, proceedings or
investigations, pending, or, to the best knowledge of WWN, threatened by or
against or effecting WWN at law or in equity, or before any governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of
any kind; WWN does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, warrant, rule, or
regulation of any court, arbitrator, or governmental agency or
instrumentality.
3.8 Books and Records. From the date hereof, and for any reasonable
period subsequent thereto, WWN and its present management will (i) give to the
Shareholders and Pacific, or their duly authorized representatives, full
access, during normal business hours, to all of its books, records, contracts
and other corporate documents and properties so that the Shareholders and
Pacific, or their duly authorized representatives, may inspect them; and (ii)
furnish such information concerning the properties and affairs of WWN as the
Shareholders and Pacific, or their duly authorized representatives, may
reasonably request. Any such request to inspect WWN's books shall be directed
to WWN's counsel, Daniel W. Jackson, at the address set forth herein under
Section 10.4 Notices.
3.9 Confidentiality. Until the Closing (and thereafter if there is no
Closing), WWN and its representatives will keep confidential any information
which they obtain from the Shareholders or from Pacific concerning its
properties, assets and the proposed business operations of Pacific. If the
terms and conditions of this Plan imposed on the parties hereto are not
consummated on or before 5:00 p.m. MST on April 1, 1999 or otherwise waived or
extended in writing to a date mutually agreeable to the parties hereto, WWN
will return to Pacific all written matter with regard to Pacific obtained in
connection with the negotiations or consummation of this Plan.
3.10 Conflict with Other Instruments. The transactions contemplated by
this Plan will not result in the breach of any term or provision of, or
constitute a default under any indenture, mortgage, deed of trust, or other
material agreement or instrument to which WWN was or is a party, or to which
any of its assets or operations are subject, and will not conflict with any
provision of the Articles of Incorporation or Bylaws of WWN.
3.11 Corporate Authority. WWN has full corporate power and authority to
enter into this Plan and to carry out its obligations hereunder and will
deliver to the Shareholders and Pacific, or their respective representatives,
at the Closing, a certified copy of resolutions of its Board of Directors
authorizing execution of this Plan by its officers and performance thereunder.
3.12 Consent of Shareholders. WWN hereby warrants and represents that
the Shareholders of WWN, being the owners of a majority of the issued and
outstanding stock of the Corporation consented in writing to the authorization
to execute this Agreement and Plan of Reorganization as between WWN and
Pacific pursuant to a stock-for-stock transaction in which WWN would acquire
one hundred percent of the issued and outstanding shares of Pacific in
exchange for the issuance of a total of 7,000,000 common shares of WWN and
thereby Pacific shall merge with and into WWN.
3.13 Resignation of Directors. Upon the Closing, the current directors
of WWN shall submit their resignations. Following the closing, the directors
and officers of WWN shall be as follows:
Jack Tortorice President, Chief Executive Officer and Director
Marilyn Tortorice Secretary
Susan Shen Chief Financial Officer
Dennis Shen Director
3.14 Authorized Capital. At the Closing, the Board of Directors of WWN
will adopt a resolution to increase the authorized capital stock of the WWN
from 25,000,000 common shares to 50,000,000.
3.15 Special Covenants and Representations Regarding the Exchanged WWN
Stock. The consummation of this Plan and the transactions herein contemplated
include the issuance of the exchanged WWN shares to the Shareholders, which
constitutes an offer and sale of securities under the Securities Act of 1933,
as amended, and applicable states' securities laws. Such transaction shall be
consummated in reliance on exemptions from the registration and prospectus
requirements of such statutes which depend interalia on the circumstances
under which the Shareholders acquire such securities. In connection with the
reliance upon exemptions from the registration and prospectus delivery
requirements for such transactions, at the Closing, Shareholders shall cause
to be delivered to WWN a Letter(s) of Investment Intent in the form attached
hereto as Exhibit B and incorporated herein by reference.
3.16 Undisclosed or Contingent Liabilities. WWN hereby represents and
warrants that as of the Closing Date, it will have no undisclosed or
contingent liabilities which have not been disclosed to Pacific in writing or
in this Agreement or in any Exhibit attached hereto.
3.17 Information. The information concerning WWN set forth in this
Plan, and the WWN schedules attached hereto, are complete and accurate in all
material respects and do not contain, or will not contain, when delivered, any
untrue statement or a material fact or omit to state a material fact the
omission of which would be misleading to Pacific in connection with this Plan.
3.19 Title and Related Matters. WWN has good and marketable title to
all of its properties, interests in properties, and assets, real and personal,
which are reflected, or will be reflected, in the WWN balance sheets, free and
clear of any and all liens and encumbrances.
3.20 Contracts or Agreements. WWN is not bound by any material
contracts, agreements or obligations which it has not already disclosed to
Pacific in writing or in this Agreement or in any Exhibit attached hereto.
True and correct copies of all such agreements have been delivered to Pacific
prior to the Closing Date.
3.21 Governmental Authorizations. WWN has all licenses, franchises,
permits and other government authorizations that are legally required to
enable it to conduct its business in all material respects as conducted on the
date hereof.
3.22 Compliance with State and Federal Reporting Requirements. WWN is
not nor has it ever been subject to the reporting requirements of section
12(g) of the Securities Exchange Act of 1934 or 15(d) of the Securities Act of
1933 (15 U.S.C. 78m or 78o (d)) and is not an investment company registered
or required to be registered under the Investment Company Act of 1940 (15
U.S.C. 80a-1 et seq.). There is publicly available information concerning WWN
as specified in paragraph (a)(5)(i) to (xiv), inclusive, and paragraph
(a)(5)(xvi) of Rule 15c2-11 under the Securities Exchange Act of 1934.
3.23 Compliance with Laws and Regulations. WWN has complied with all
applicable statutes and regulations of any federal, state, or other applicable
jurisdiction or agency thereof, except to the extent that noncompliance would
not materially and adversely effect the business, operations, properties,
assets, or condition of WWN or except to the extent that noncompliance would
not result in the occurrence of any material liability, not otherwise
disclosed to Pacific. The foregoing includes compliance with the corporate
laws of the State of Nevada with respect to all action taken by WWN.
3.24 Approval of Plan. The Board of Directors of WWN has authorized the
execution and delivery of this Plan by WWN and have approved the Plan and the
transactions contemplated hereby. WWN has full power, authority, and legal
right to enter into this Plan and to consummate the transactions contemplated
hereby.
3.25 Investment Intent. WWN is acquiring the Pacific shares to be
transferred to it under this Plan for the purpose of merging with Pacific and
not with a view to the sale or distribution thereof, and WWN shall cancel the
Pacific shares upon the completion of the merger.
3.26 Unregistered Shares and Access to Information. WWN understands
that the offer and sale of the Pacific shares have not been registered with or
reviewed by the Securities and Exchange Commission under the Securities Act of
1933, as amended, or with or by any state securities law administrator, and no
federal, state securities law administrator has reviewed or approved any
disclosure or other material concerning Pacific or the Pacific shares. WWN
has been provided with and reviewed all information concerning Pacific, the
Pacific shares as it has considered necessary or appropriate as a prudent and
knowledgeable investor to enable it to make an informed investment decision
concerning the Pacific shares. WWN has made an investigation as to the merits
and risks of its acquisition of the Pacific Shares and has had the opportunity
to ask questions of, and has received satisfactory answers from, the officers
and directors of Pacific concerning Pacific, the Pacific shares and related
matters, and has had an opportunity to obtain additional information necessary
to verify the accuracy of such information and to evaluate the merits and
risks of the proposed acquisition of the Pacific shares.
3.27 Obligations. WWN is not aware of any outstanding obligations to
any of its principal employees or consultants as of the Closing.
3.28 WWN Schedules. WWN has delivered to Pacific the following items
listed below, hereafter referred to as the "WWN Schedules", which is hereby
incorporated by reference and made a part hereof. A certification executed by
a duly authorized officer of WWN on or about the date within the Plan is
executed to certify that the WWN Schedules are true and correct.
(a) Copy of Articles of Incorporation, as amended, and Bylaws;
(b) Financial statements;
(c) Shareholder list;
(d) Resolution of Directors approving Plan;
(e) Officers' Certificate as required under Section 6.2 of the Plan;
(f) Opinion of counsel as required under Section 6.4 of the Plan;
(g) Certificate of Good Standing;
(h) Consent of Shareholders approving Plan.
Section 4
Representations, Warranties and Covenants of Pacific
Pacific represents and warrants to, and covenants with, the Shareholders
and WWN as follows:
4.1 Corporate Status. Pacific is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and
was incorporated on September 22, 1997. Pacific has full corporate power and
is duly authorized, qualified, franchised, and licensed under all applicable
laws, regulations, ordinances, and orders of public authorities to own all of
its properties and assets and to carry on its business on all material
respects as it is now being conducted, and there is no jurisdiction in which
the character and location of the assets owned by it, or the nature of the
business transacted by it, requires qualification. Included in the Pacific
schedules (defined below) are complete and correct copies of its Articles of
Incorporation and Bylaws as in effect on the date hereof. The execution and
delivery of this Plan does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of Pacific's Articles of
Incorporation or Bylaws. Pacific has taken all action required by law, its
Articles of Incorporation, its Bylaws, or otherwise, to authorize the
execution and delivery of this Plan.
4.2 Capitalization. The authorized capital stock of Pacific as of the
date hereof consists of 1,000,000 common shares. As of the date hereof all
common shares of Pacific issued and outstanding are fully paid, non-assessable
shares. Except for the option dated September 29, 1998 for 50,000 shares,
there are no outstanding options, warrants, obligations convertible into
shares of stock, or calls or any understanding, agreements, commitments,
contracts or promises with respect to the issuance of Pacific's common stock
or with regard to any options, warrants or other contractual rights to acquire
any of Pacific's authorized but unissued common shares.
4.3 Conduct of Business. Pacific will use its best efforts to maintain
and preserve its business organization, employee relationships and goodwill
intact, and will not, without the prior written consent of WWN, enter into any
material commitments except in the ordinary course of business.
Pacific agrees that Pacific will conduct itself in the following manner
pending the Closing:
(a) Certificate of Incorporation and Bylaws. No change will be made in
the Certificate of Incorporation or Bylaws of Pacific.
(b) Capitalization, etc. Pacific will not make any change in its
authorized or issued shares of any class, declare or pay any dividend or other
distribution, or issue, encumber, purchase or otherwise acquire any of its
shares of any class.
4.4 Title to Property. Pacific has good and marketable title to all of
its properties and assets, real and personal, proprietary or otherwise, as
will be reflected in the balance sheets of Pacific, and the properties and
assets of Pacific are subject to no mortgage, pledge, lien or encumbrance,
unless as otherwise disclosed in its financial statements.
4.5 Litigation. Except as disclosed in the Pacific Schedules there are
no material actions, suits, or proceedings, pending, or, to the best knowledge
of Pacific, threatened by or against or effecting Pacific at law or in equity,
or before any governmental agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind; Pacific does not have any knowledge of any
default on its part with respect to any judgment, order, writ, injunction,
decree, warrant, rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality.
4.6 Books and Records. From the date hereof, and for any reasonable
period subsequent thereto, Pacific and its present management will (i) give to
WWN, or their duly authorized representatives, full access, during normal
business hours, to all of its books, records, contracts and other corporate
documents and properties so that WWN, or their duly authorized
representatives, may inspect them; and (ii) furnish such information
concerning the properties and affairs of Pacific as the Shareholders and
Pacific, or their duly authorized representatives, may reasonably request.
Any such request to inspect Pacific's books shall be directed to Pacific's
representative, at the address set forth herein under Section 10.4 Notices.
4.7 Confidentiality. Until the Closing (and thereafter if there is no
Closing), Pacific and its representatives will keep confidential any
information which they obtain from the Shareholders or from Pacific concerning
its properties, assets and the proposed business operations of Pacific. If
the terms and conditions of this Plan imposed on the parties hereto are not
consummated on or before 5:00 p.m. MST on April 1, 1999 or otherwise waived or
extended in writing to a date mutually agreeable to the parties hereto,
Pacific will return to WWN all written matter with regard to WWN obtained in
connection with the negotiations or consummation of this Plan.
4.8 Investment Intent. The Shareholders represent and covenant that
they are acquiring the unregistered and restricted common shares of WWN to be
delivered to them under this Plan for investment purposes and not with a view
to the subsequent sale or distribution thereof, and as agreed, supra, the
Shareholders, their successors and assigns agree to execute and deliver to WWN
on the date of Closing or no later than the date on which the restricted
shares are issued and delivered to the Shareholders, their assigns, or
designees, an Investment Letter similar in form to that attached hereto as
Exhibit B.
4.9 Unregistered Shares and Access to Information. Pacific and the
Shareholders understand that the offer and sale of WWN shares to be exchanged
for the Pacific shares have not been registered with or reviewed by the
securities and Exchange Commission under the Securities Act of 1933, as
amended, or with or by any state securities law administrator, and no federal
or state securities law administrator has reviewed or approved any disclosure
or other material facts concerning WWN or WWN stock. Pacific and the
Shareholders have been provided with and reviewed all information concerning
WWN and WWN shares, to be exchanged for the Pacific shares as they have
considered necessary or appropriate as prudent and knowledgeable investors to
enable them to make informed investment decisions concerning the WWN shares,
to be exchanged for the Pacific shares. Pacific and the Shareholders have
made an investigation as to the merits and risks of their acquisition of the
WWN shares, to be exchanged for the Pacific shares and have had the
opportunity to ask questions of, and have received satisfactory answers from,
the officers and directors of WWN concerning WWN shares to be exchanged for
the Pacific shares and related matters, and have had an opportunity to obtain
additional information necessary to verify the accuracy of such information
and to evaluate the merits and risks of the proposed acquisition of the WWN
shares to be exchanged for the Pacific shares.
4.10 Title to Shares. The Shareholders are the beneficial and record
owners,free and clear of any liens and encumbrances, of whatever kind or
nature, of all of the shares of Pacific of whatever class or series, which the
Shareholders have contracted to exchange.
4.11 Contracts.
(a) Set forth in the Pacific Schedules are copies or descriptions of all
material contracts, written or oral and all agreements, franchises, licenses,
or other commitments to which Pacific is a party or by which Pacific or its
properties are bound.
(b) Except as may be set forth in the Pacific Schedules, Pacific is not
a party to any contract, agreement, corporate restriction, or subject to any
judgment, order, writ, injunction, decree, or award, which materially and
adversely effect the business, operations, properties, assets, or conditions
of Pacific.
(c) Except as set forth in the Pacific Schedules, Pacific is not a party
to any material oral or written (i) contract for employment of any officer
which is not terminable on 30 days (or less) notice; (ii) profit sharing,
bonus, deferred compensation, stock option, severance, or any other retirement
plan of arrangement covered by Title IV of the Employee Retirement Income
Security Act, as amended, or otherwise covered; (iii) agreement providing for
the sale, assignment or transfer of any of its rights, assets or properties,
whether tangible or intangible, except sales of its property in the ordinary
course of business with a value of less than $2,000; or (iv) waiver of any
right of any value which in the aggregate is extraordinary or material
concerning the assets or properties scheduled by Pacific, except for adequate
value and pursuant to contract. Pacific has not entered into any material
transaction which is not listed in the Pacific Schedules or reflected in the
Pacific financial statements.
4.12 Material Contract Defaults. Pacific is not in default in any
material respect under the terms of any contract, agreement, lease or other
commitment which is material to the business, operations, properties or
assets, or condition of Pacific, and there is no event of default or event
which, with notice of lapse of time or both, would constitute a default in any
material respect under any such contract, agreement, lease, or other
commitment in respect of which Pacific has not taken adequate steps to prevent
such default from occurring, or otherwise compromised, reached a satisfaction
of, or provided for extensions of time in which to perform under any one or
more contract obligations, among others.
4.13 Conflict with Other Instruments. The consummation of the within
transactions will not result in the breach of any term or provision of, or
constitute a default under any indenture, mortgage, deed of trust, or other
material agreement or instrument to which Pacific was or is a party, or to
which any of its assets or operations are subject, and will not conflict with
any provision of the Articles of Incorporation or Bylaws of Pacific.
4.14 Governmental Authorizations. Pacific is in good standing in the
State of California. Except for compliance with federal and state securities
laws, no authorization, approval, consent or order of, or registration,
declaration, or filing with, any court or other governmental body is required
in connection with the execution and delivery by Pacific of this Plan and the
consummation by Pacific of the transactions contemplated hereby.
4.15 Compliance with Laws and Regulations. Pacific has complied with
all applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely effect the business,
operations, properties, assets, or condition of Pacific or except to the
extent that noncompliance would not result in the occurrence of any material
liability, not otherwise disclosed to WWN.
4.16 Approval of Plan. The Board of Directors of Pacific have
authorized the execution and delivery of this Plan by Pacific and have
approved the Plan and the transactions contemplated hereby. Pacific has full
power, authority, and legal right to enter into this Plan and to consummate
the transactions contemplated hereby.
4.17 Information. The information concerning Pacific set forth in this
Plan, and the Pacific Schedules attached hereto, are complete and accurate in
all material respects and do not contain, or will not contain, when delivered,
any untrue statement or a material fact or omit to state a material fact the
omission of which would be misleading to WWN in connection with this Plan.
4.18 Pacific Schedules. Pacific has delivered to WWN the following
items listed below, hereafter referred to as the "Pacific Schedules", which is
hereby incorporated by reference and made a part hereof. A certification
executed by a duly authorized officer of Pacific on or about the date within
the Plan is executed to certify that the Pacific Schedules are true and
correct.
(a) Copy of Articles of Incorporation and Bylaws, certified by the
Secretary of Pacific;
(b) Financial Statements;
(C) A schedule setting forth the shareholders, together with the number
of shares owned beneficially or of record by each (also attached as Exhibit
A);
(d) Resolutions of Board of Directors approving Plan;
(e) Consent of Shareholders approving Plan;
(f) A schedule showing the name and location of each bank or other
institution with which Pacific has an account and the names of the authorized
persons to draw thereon or having access thereto;
(g) A list of key employees, including current compensation, with
notation as to job description and whether or not such employee is subject to
written contract, and if subject to a contract or employment agreement, a copy
of the same;
(h) A schedule setting forth all material contracts;
(i) Description of all ongoing, pending or threatened litigation;
(j) Officers' Certificate as required by Section 7.2 of the Plan;
(k) Schedule of all debts, mortgages, security interests, pledges, liens,
encumbrances, claims and the like;
(l) Certificate of Good Standing.
Section 5
Special Covenants
5.1 Pacific Information Incorporated in WWN's Reports. Pacific
represents and warrants to WWN that all the information furnished under this
Plan shall be true and correct in all material respects and that there is no
omission of any material fact required to make the information stated not
misleading. Pacific agrees to indemnify and hold WWN harmless, including each
of its Directors and Officers, and each person, if any, who controls such
party, under any applicable law from and against any and all losses, claims,
damages, expenses or liabilities to which any of them may become subject under
applicable law, or reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
actions, whether or not resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or are based on
any untrue statement, alleged untrue statement, or omission of a material fact
contained in such information delivered hereunder.
5.2 WWN Information Incorporated in Pacific's Reports. WWN represents
and warrants to Pacific that all the information furnished under this Plan
shall be true and correct in all material respects and that there is no
omission of any material fact required to make the information stated not
misleading. The current shareholders, officers, directors of WWN jointly and
severally agree to indemnify and hold Pacific harmless, including each of its
Directors and Officers, and each person, if any, who controls such party,
under any applicable law from and against any and all losses, claims, damages,
expenses, costs or liabilities to which any of them may become subject under
applicable law, or reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
actions, whether or not resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or relating to
WWN's breach of any representation, warranty, covenant or agreement contained
herein or are based on any untrue statement, alleged untrue statement, or
omission of a material fact contained in such information delivered hereunder.
5.3 Special Covenants and Representations Regarding the Exchanged WWN
Stock. The consummation of this Plan and the transactions herein
contemplated, including the issuance of the WWN shares in exchange for one
hundred percent (100%) of the issued and outstanding shares of Pacific to the
Shareholders constitutes the offer and sale of securities under the Securities
Act and the applicable state statutes, which depend, inter alia, on the
circumstances under which the Shareholders acquire such securities. WWN
intends to rely on the exemption of the registration provision of Section 5 of
the Securities Act as provided for under Section 4(2) of the Securities Act of
1933, which states "transactions not involving a public offering", among
others. Each Shareholder upon submission of his Pacific shares and the
receipt of the WWN shares exchanged therefor, shall execute and deliver to WWN
a letter of investment intent to indicate, among other representations, that
the Shareholder is exchanging the Pacific shares for WWN shares for investment
purposes and not with a view to the subsequent distribution thereof. A
proposed Investment Letter is attached hereto as Exhibit B and incorporated
herein by reference for the general use by the Shareholders, as they may
determine.
5.4 Action Prior to Closing. Upon the execution hereof until the
Closing date, and the completion of the consolidated audited financials,
(a) Pacific and WWN will (i) perform all of its obligations under
material contracts, leases, insurance policies and/or documents relating to
its assets and business; (ii) use its best efforts to maintain and preserve
its business organization intact, to retain its key employees, and to maintain
its relationship with existing potential customers and clients; and (iii)
fully comply with and perform in all material respects all duties and
obligations imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by all federal or state governmental
authorities.
(b) Neither Pacific nor WWN will (i) make any change in its Articles of
Incorporation or Bylaws except and unless as contemplated pursuant to Section
3 of this Plan; (ii) enter into or amend any contract, agreement, or other
instrument of the types described in the parties' schedules, except that a
party may enter into or amend any contract or other instrument in the ordinary
course of business involving the sale of goods or services, provided that such
contract does not involve obligations in excess of $10,000.
Section 6
Conditions Precedent to Obligations of
Pacific and the Shareholders
All obligations of Pacific and the Shareholders under this Plan are
subject to the satisfaction, on or before the Closing date, except as
otherwise provided for herein, or waived or extended in writing by the parties
hereto, of the following conditions:
6.1 Accuracy of Representations. The representations and warranties
made by WWN in this Plan were true when made and shall be true as of the
Closing date (except for changes therein permitted by this Plan) with the same
force and effect as if such representations and warranties were made at and as
of the Closing date; and, WWN shall have performed and complied with all
aspects of this Agreement, unless waived or extended in writing by the parties
hereto. Pacific shall have been furnished with a certificate, signed by a
duly authorized executive officer of WWN and dated the Closing date, to the
foregoing effect.
6.2 Officers' Certificate. Pacific and the Shareholders shall have been
furnished with a certificate dated the Closing date and signed by a duly
authorized executive officer of WWN, to the effect that no litigation,
proceeding, investigation, claim, demand or inquiry is pending, or to the best
knowledge of WWN, threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Plan, or
which might result in any material adverse change in the assets, properties,
business, or operations of WWN, and that this Agreement has been complied with
in all material respects.
6.3 No Material Adverse Change. Prior to the Closing date, there shall
have not occurred any material adverse change in the financial condition,
business or operations of WWN, nor shall any event have occurred which, with
lapse of time or the giving of notice or both, may cause or create any
material adverse change in the financial condition, business or operations of
WWN, except as otherwise disclosed to Pacific.
6.4 Opinion of Counsel of WWN. WWN shall furnish to Pacific and the
Shareholders the opinion of Daniel W. Jackson, Esq. dated as of the Closing
date and in form and substance satisfactory to Pacific and the Shareholders to
the effect that:
(a) WWN is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Nevada and is duly qualified in each
other foreign jurisdiction where the nature of its business requires such
qualification and with all requisite corporate power to perform its
obligations under this Plan.
(b) The business of WWN, as presently conducted, including, upon the
consummation hereof, the ownership of all of the issued and outstanding shares
of Pacific, does not require to register it to do business as a foreign
corporation in any jurisdiction other than under the jurisdiction of its
Articles of Incorporation or Bylaws and WWN has complied in all material
respects with all the laws, regulations, licensing requirements and orders
applicable to its business activities and has filed with the proper
authorities, including the Department of Commerce, Division of Corporations,
and Secretary of State for the State of Nevada, all statements and reports
required to be filed.
(c) The authorized and outstanding capital stock of WWN as set forth in
Section 3.2 above, and all issued and outstanding shares, including the
7,000,000 shares issued hereto, have been duly and validly authorized and
issued and are fully paid and non-assessable and have been issued in
compliance with all applicable federal and state securities laws.
(d) There are no material claims, suits or other legal proceedings
pending or threatened against WWN of any court or before or by any
governmental body which might materially effect the business of WWN or the
financial condition of WWN as a whole and no such claims, suits or legal
proceedings are contemplated by governmental authorities against WWN.
(e) The consummation of the transactions contemplated by this Plan will
not violate or contravene the provisions of the Certificate of Incorporation
or Bylaws of WWN, or any contract, agreement, indenture, mortgage, or order by
which WWN is bound.
(f) This Plan has been duly executed by an authorized officer of WWN and
constitutes a legal, valid and binding obligation of WWN enforceable in
accordance with its terms, subject to the effect of any bankruptcy,
insolvency, reorganization, moratorium, or similar law effecting creditors'
rights generally and general principles of equity (regardless of whether such
principles are considered in a proceeding in equity or law).
(g) The execution and delivery of this Plan and the consummation of the
transactions contemplated hereby have been ratified by a majority of the
Shareholders of WWN and have been duly authorized by its Board of Directors.
(h) WWN has not, nor will it undertake any action, the result of which
would endanger the tax-free nature of the Plan.
6.5 Good Standing. Pacific shall have received a Certificate of Good
Standing from the State of Nevada, dated within thirty (30) days prior to
Closing, but in no event later than ten days subsequent to the execution
hereof certifying that WWN is in good standing as a corporation in the State
of Nevada.
6.6 Other Items. Pacific and the Shareholders shall have received such
further documents, certifications or instruments relating to the transactions
contemplated hereby as Pacific and the Shareholders may reasonably request.
Section 7
Conditions Precedent to Obligations of WWN
All obligations of WWN under this Plan are subject, at its option, to the
fulfillment, before the Closing, of each of the following conditions:
7.1 Accuracy of Representations. The representations and warranties
made by Pacific and the Shareholders under this Plan were true when made and
shall be true as of the Closing date (except for changes therein permitted by
this Plan) with the same force and effect as if such representations and
warranties were made at and as of the Closing date; and, WWN shall have
performed and complied with all aspects of this Agreement, unless waived or
extended in writing by the parties hereto. WWN shall have been furnished with
a certificate, signed by a duly authorized executive officer of Pacific and
dated the Closing date, to the foregoing effect.
7.2 Officers' Certificate. WWN shall have been furnished with a
certificate dated the Closing date and signed by a duly authorized executive
officer of Pacific, to the effect that no litigation, proceeding,
investigation, claim, deed, or inquiry is pending, or to the best knowledge of
Pacific, threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Plan, or which might
result in any material adverse change in the assets, properties, business, or
operations of Pacific, and that this Agreement has been complied with in all
material respects.
7.3 No Material Adverse Change. Prior to the Closing date, there shall
have not occurred any material adverse change in the financial condition,
business or operations of WWN, nor shall any event have occurred which, with
lapse of time or the giving of notice or both, may cause or create any
material adverse change in the financial condition, business or operations of
Pacific, except as otherwise disclosed to WWN.
7.4 Good Standing. WWN shall have received a Certificate of Good
Standing from the State of California, dated within sixty (60) days prior to
Closing, but in no event later than ten days subsequent to the execution
hereof certifying that Pacific is in good standing as a corporation in the
State of California.
7.5 Dissenters' Rights Waived. Shareholders representing one hundred
percent (100%) of the issued and outstanding shares of Pacific, and each of
them, have agreed and hereby waive any dissenters' rights, if any, under the
laws of the State of California in regards to any objection to this Plan as
outlined herein and otherwise consent to and agree and authorize the execution
and consummation of the within Plan in accordance to the terms and conditions
of this Plan by the management of Pacific.
7.6 Other Items. WWN shall have received such further documents,
certifications or instruments relating to the transactions contemplated hereby
as WWN may reasonably request.
7.7 Execution of Investment Letter. The Shareholders shall have
executed and delivered copies of Exhibit B to WWN.
Section 8
Termination
8.1 Termination by Pacific or the Shareholders. This Plan may be
terminated at any time prior to the Closing date by action of Pacific or the
Shareholders, if WWN shall fail to comply in any material respect with any of
the covenants or agreements contained in this Plan, or if any of its
representations and warranties contained herein shall be inaccurate in any
material respect.
8.2 Termination by WWN. This Plan may be terminated at any time prior
to the Closing date by action of WWN if Pacific shall fail to comply in any
material respect with any of the covenants or agreements contained in this
Plan, or if any of its representations or warranties contained herein shall be
inaccurate in any material respect.
8.3 Termination by Mutual Consent
(a) This Plan may be terminated at any time prior to the Closing date by
mutual consent of WWN, expressed by action of its Board of Directors, Pacific
or the Shareholders.
(b) If this Plan is terminated pursuant to Section 8, this Plan shall be
of no further force and effect and no obligation, right or liability shall
arise hereunder. Each party shall bare its own costs in connection herewith.
Section 9
Shareholders' Representative
The Shareholders hereby irrevocably designate and appoint Jack Tortorice,
as their agent and attorney in fact (the "Shareholders' Representative") with
full power and authority until the Closing to execute, deliver and receive on
their behalf all notices, requests and other communications hereunder; to fix
and alter on their behalf the date, time and place of the Closing; to waive,
amend or modify any provisions of this Plan and to take such other action on
their behalf in connection with this Plan, the Closing and the transactions
contemplated hereby as such agent deems appropriate; provided, however, that
no such waiver, amendment or modification may be made if it would decrease the
number of shares to be issued to the Shareholders under Section 1 hereof or
increase the extent of their obligation to WWN hereunder, unless agreed in
writing by the Shareholders.
Section 10
General Provisions
10.1 Further Assurances. At any time, and from time to time, after the
Closing date, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry out
the intent and purposes of the Plan.
10.2 Payments of Costs and Fees. WWN and Pacific shall each bear their
own costs and expenses, including any legal and accounting fees in connection
with the negotiation, execution and consummation of the Plan.
10.3 Press Release and Shareholders' Communications. On the date of
Closing, or as soon thereafter as practicable, Pacific and the Shareholders
shall cause to have promptly prepared and disseminated a Pacific release
concerning the execution and consummation of the Plan, such press release and
communication to be released promptly and within the time required by the
laws, rules and regulations as promulgated by the United States Securities and
Exchange Commission, and concomitant therewith to cause to be prepared a full
and complete letter to WWN's shareholders which shall contain information
required by Regulation 240.14f-1 as promulgated under Section 14(f) as
mandated under the Securities and Exchange Act of 1934, as amended. All press
releases regarding WWN following the Closing shall be approved in advance by
the Board of Directors.
10.4 Notices. All notices and other communications required or
permitted hereunder shall be sufficiently given if personally delivered, sent
by registered mail, or certified mail, return receipt requested, postage
prepaid, or by facsimile transmission addressed to the following parties
hereto or at such other addresses as follows:
If to WWN: Worldwide Wireless Networks, Inc.
525 South 300 East
Salt Lake City, Utah 84111
With a copy to: Daniel W. Jackson
525 South 300 East
Salt Lake City, Utah 84111
If to Pacific: Pacific Link Internet, Inc.
770 The City Drive South, # 3400
Orange, California 92868
With a copy to: Jack Tortorice
770 The City Drive South, # 3400
Orange, California 92868
or at such other addresses as shall be furnished in writing by any party in
the manner for giving notices hereunder, and any such notice or communication
shall be deemed to have been given as of the date so delivered, mailed, sent
by facsimile transmission, or telegraphed.
10.5 Entire Agreement. This Plan represents the entire agreement
between the parties relating to the subject matter hereof, including any
previous letters of intent, understandings, or agreements between WWN, Pacific
and the Shareholders with respect to the subject matter hereof, all of which
are hereby merged into this Plan, which alone fully and completely expresses
the agreement of the parties relating to the subject matter hereof. Excepting
the foregoing agreement, there are no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set forth herein.
10.6 Governing Law. This Plan shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada, except to the
extent preempted by federal law, in which event (and to that extent only)
federal law shall govern.
10.7 Tax Treatment. The transaction contemplated by this Plan is
intended to qualify as a "tax-free" reorganization under the provisions of
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended.
Pacific and WWN acknowledge, however, that each are being represented by their
own tax advisors in connection with this transaction, and neither has made any
representations or warranties to the other with respect to treatment of such
transaction or any part or effect thereof under applicable tax laws,
regulations or interpretations; and no attorney's opinion or tax revenue
ruling has been obtained with respect to the tax consequences of the
transactions contemplated by the within Plan.
10.8 Attorney Fees. In the event that any party prevails in any action
or suit to enforce this Plan, or secure relief from any default hereunder or
breach hereof, the nonprevailing party or parties shall reimburse the
prevailing party or parties for all costs, including reasonable attorney fees,
incurred in connection therewith.
10.9 Amendment of Waiver. Every right and remedy provided herein shall
be cumulative with every other right and remedy, whether conferred herein, at
law or in equity, and may be enforced concurrently or separately, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, therefore, or
thereafter occurring or existing. Any time prior to the expiration of thirty
(30) days from the date hereof, this Plan may be amended by a writing signed
by all parties hereto, with respect to any of the terms contained herein, and
any term or condition of this Plan may be waived or the time for performance
thereof may be extended by a writing signed by the party or parties for whose
benefit the provision is intended.
10.10 Counterparts. This Plan may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be
an original, and all of which together shall constitute one and the same
instruments.
10.11 Headings. The section and subsection headings in this Plan are
inserted for convenience only and shall not effect in any way the meaning or
interpretation of the Plan.
10.12 Parties in Interest. Except as may be otherwise expressly
provided herein, all terms and provisions of this Plan shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
beneficiaries, personal and legal representatives, and assigns.
IN WITNESS WHEREOF, the parties have executed this Plan and Agreement of
Reorganization effective the day and year first set forth above.
WORLDWIDE WIRELESS NETWORKS, INC.
Attest:
/s/ April Marino By: /s/ Anita Patterson
- ---------------- -------------------
Its President
PACIFIC LINK INTERNET, INC.
Attest:
/s/ Dennis Shen By: /s/ Jack Tortorice
- --------------- ------------------
Its President
SHAREHOLDERS:
Attest:
/s/ Dennis Shen By: /s/ Jack Tortorice
- --------------- ------------------
Jack Tortorice
Attest:
/s/ Jack Tortorice By: /s/ Dennis Shen
- ------------------ ---------------
Attest:
/s/ Dennis Shen By: /s/ Susan Shen
- --------------- --------------
Susan Shen
Attest:
/s/ Dennis Shen By: /s/ Sean LeMons
- --------------- ---------------
Susan LeMons
Attest:
/s/ Dennis Shen By: /s/ Ming Chau Yeung
- --------------- -------------------
Ming Chau Yeung
Attest:
/s/ Dennis Shen By: /s/ Zhi Gang Zhang
- --------------- ------------------
Zhi Gang Zhang
Exhibit 22.1
Subsidiaries of the Registrant
Global Pacific Wireless, Inc. (inactive)
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